Market update - February 2021
In my last market update I was optimistic - mostly about the improving weather and the prospect of my kids returning to school. February’s update brings more good news (also on a personal note). Previously less than excited about my promotion to the 40-50 age category, I’m now in the group of people next in line for their first vaccination dose.
For anyone working in any kind of sales environment, you learn over time that people make decisions based on facts and figures, but more importantly feeling and sentiment. Whilst the former can provide a good background, most people are making a decision today based on what they believe will happen in the future.
20 million people have already received their first vaccination dose and combined with lockdown 3.0, the death rate is thankfully falling. It really does feel like the end might be in sight.
The big news this week was the extension of the stamp duty holiday through to the end of June 2021, together with government backed 95% LTV mortgages on all properties up to £600,000.
The stamp duty holiday gave life to the market in the second half of 2020, with data from HMRC showing nearly 70,000 more transactions completed in the four months leading up to January 2021 than during the same period in 2019-20. According to TwentyCi, the second half of 2020 saw 50% more agreed sales than in the same period in 2019.
However in January this figure was down to 20%. The physical constraints of the third national lockdown combined with the prospect of missing out on the stamp duty holiday seemed to take a degree of urgency out of the market.
The extension of the stamp duty holiday was reflected almost immediately in the data, with Rightmove experiencing its busiest ever day for traffic on budget day, with 6% more people searching for a property than on the last record day – which was Sunak’s previous Budget, on 8th July 2020.
More data from Rightmove shows another side effect of the most recent lockdown - the lack of supply - new seller numbers are 21% down on the previous year as owners of family homes delay coming to market, perhaps due to home-schooling distractions or a more general reluctance from owner occupiers, but particularly those in more vulnerable age groups, to allow viewings.
Prime Outer London Vs. Prime Central London
It’s been a challenging 12 months for prime central London. Data from Knight Frank shows that whilst prices in the markets of prime outer London were up again in February, marking the seventh consecutive month of quarter-on-quarter growth, the higher-value enclaves of prime central London remain disproportionately affected by the lack of overseas buyers.
So whilst areas like Belsize Park, Dulwich and Wimbledon are all 4% up since April last year, prime central London has witnessed an annual price decline of around 4.4%, with transaction volumes in the year to February 20% down on the previous 12-month period.
However as travel restrictions are eased and London gradually opens up, I suspect that this market will return, perhaps with a flourish. As the below (quite brilliant) graph shows, the appeal of London remains strong, and whilst not indestructible, I suspect that even the 2% stamp duty surcharge for non-UK buyers will do little to dampen the enthusiasm of the global elite for London homes.
Data compiled from The BBC, HMRC, Knight Frank, TwentyCi, Rightmove & Prime Resi
Things I’ve been paying attention to, watching or reading this week
There’s a lot of people with very strong opinions about what the future of estate agency might look like - with quite a few calling time on the established model.
It seems that the market might not yet agree, with three high profile purchases of estate agency operators this week alone. However the one that really caught my attention was the purchase of Roy Brooks brand. Whilst its eponymous owner died in 1971, his adverts live on as part of estate agency folklore;
£3,995 FREEHOLD. ANTIQUARIAN PROUDLY OFFERS his ghastly Peckham house. Almost innocent of plumbing, no bathrm. – bodily ablutions confined to a couple of sinks & the canal at the bottom of the garden. 8 fair sized rooms. As the artists have already moved into Peckham it is only a matter of time before they are followed by the fringe professions, Stage, Tely and Advertising – with the Chelsea type of monied intellectual snob breathing on their necks – then a dump like this will be worth well over £10,000/ MOVE QUICKLY.
You can buy a second hand copy of his book, “Brothel in Pimlico” here
I wrote about Adam Grant in last week’s blog. This week I read a fascinating article by him in the Harvard Business Review on how to change anyone’s mind and it’s a brilliant insight into what it was like working with Steve Jobs.