These monthly property market updates are starting to feel a bit like government propaganda.
Today on the Simon Deen Real Estate Blog, I can exclusively(ish) reveal that more than 30 million people have now been vaccinated. By the end of July it’s anticipated that the entire population will have received their first jab.
Whichever way you cut it, so far the UK programme has been a resounding success.
As the weather improves, lockdown measures continue to ease and a greater proportion of the population are vaccinated, the hope is that the number of new cases will continue to fall and the economy will begin to recover.
A changing focus
In previous posts I have discussed in detail how the pandemic is changing what people expect of their homes. An August 2020 report by the London Assembly revealed that 33% of Londoners want to move to a new home, with 46% wanting to move out of London.
Unsurprisingly, of those wanting to stay in London, private outside space and close proximity to parks and open spaces are major determining factors.
According to Rightmove, Cornwall has overtaken London this year as the most searched for location. Neighbouring Devon sits in third, and Dorset has risen from 20th to 10th.
This sentiment has been backed up by the statistics too. According to Savills, Winchester, Oxford and Bath have seen prime values rise 4%, 3.7% and 3.2% respectively in Q1 2021.
The country house market over £2m is up 2.9% quarterly and 8.8% annually, with demand continuing to outstrip supply.
A supply side problem
However, it’s not just the country market where demand is outstripping supply. The UK has both a housing affordability and a house building problem.
According to the Financial Times, the ratio of average house prices to earnings in the fourth quarter of 2020 was 8.4%, roughly the same as in 2007, just before the financial crisis, and higher than in any other year since the 1880’s.
As the above graph demonstrates, the cost of housing has increased exponentially since the millennium, and again since the financial crisis. The reasons for this are multifaceted, and of course historically low interest rates have played an important role.
The more obvious reason is the number of homes being built, which has fallen dramatically since the 1980’s, almost to a point of stagnation.
A springtime sellers market
This supply side problem has been accentuated by the pandemic, with homeowners reluctant to allow viewings during lockdown 3.0.
Rightmove are reporting the strongest market in a decade, with the average price of a new listing up by 0.8%, and the number of potential buyers enquiring about each available property 34% higher than 12 months ago. Daily visits to Rightmove are at 7 million, 40% up on the same period last year.
Prime central exception
There is of course one notable exception to all of this - Prime Central London.
Savills recently declared that this market has bottomed out, with average prices showing positive growth for the first time in 12 months.
The anticipated end of inbound quarantine and the return of foreign buyers to the London market should strengthen demand in the latter part of this year.
Looking forward
London’s residential property market has historically been driven by many elements, from the seemingly obvious to the less so. Sentiment and political and economic stability are clearly determining factors, but so are school terms and the weather. In years gone by Spring and Autumn were the busiest periods.
However with mainland Europe continuing to struggle with their vaccination programme and a new wave of infections, unfortunately it looks like many summer holidays will be cancelled. When combined with the tapering of the current Stamp Duty incentive measures, starting at the end of June 2021, I suspect that strong demand and weak supply will continue right through the summer to the early Autumn.
So, as before - if you’re looking to move this year, get yourself organised. A small investment of time at the outset of the process will save a lot of aggravation, and potential disappointment down the line.
Here’s hoping for some sunshine over the Easter weekend.
Data compiled from BBC, Savills, FT, OECD, Schroders, Rightmove & Prime Resi
Things I’ve been inspired by this week
The Seth Godin love affair continues, sorry. This week it’s been “Seth Godin’s Startup School”. His insights are fascinating and it’s been unbelievably helpful to me in my first six months of business.
Seth Godin is a thought leader in the marketing and business world. In this rare live recording, hear Seth as he guides thirty entrepreneurs through a workshop exploring how they can build and run their dream business.
I’ve just started Adam Grant’s new book, “Think Again: The Power of Knowing What You Don’t Know”.
It’s challenging and thought provoking, but most importantly funny too.
In too many domains of our lives, we never gain enough expertise to question our opinions or discover what we don’t know.
We have just enough information to feel self-assured about making pronouncements and passing judgment, failing to realise that we’ve climbed to the top of Mount Stupid without making it over to the other side.