ARK’s Market Synopsis

COMMENTARY

Welcome to the latest edition of ARK’s Market Synopsis report covering market outcomes to the end of June and with Rightmove picking up reporting for July.

It is an interesting month; June is the first full month of trading in England post lockdown and all of the reports are positive about the number of enquiries, buyer engagement and willingness to enter contracts.

That all feeds into our own team’s reports of their work with clients selling SO and ORS. Generally, loads of activity and busier than at this time last year and busier than we anticipated.

The immediate effect of the stamp duty holiday has been to “amplify the buyer surge” according to Rightmove.

Prices seem to be holding up but Halifax reported a decrease in average house prices by 0.1% in June. Nationwide also reports a decrease in UK house prices but at a slightly higher reading of 1.4% for June. Both can be considered marginal.

Although much emphasis has been on house prices during COVID, the greatest impact has been seen in sales volumes. Hometrack estimates “124,000 sales will be lost over 2020 as a result of the market closure”. COVID has also impacted household decisions, Hometrack characterises these as ‘shifts in priorities’ rather than ‘shifts in market fundamentals’ and expects to see a rebalancing in demand.

Though generally pessimistic in its reporting, the RICS reporting shows a ray of hope. “In terms of buyer demand, a headline net balance of +61% of survey participants saw a rise in enquiries over June. This marks a strong rebound compared to readings of -7% and -94% posted in April and May respectively.”

New instructions being listed onto the sales market also rose (from -22% in May) to a net balance of +42% of contributors noting an increase. Moreover, RICS states “newly agreed sales moved into positive territory for the first time since February, with a net balance of +43% of contributors citing an increase in transactions during June.”

Moving onto Rightmove, “The average price of property coming to market is £320,265 this month [July], up by an average of 2.4% (+£7,640) compared to March before the housing market was put on hold.”

Buyer enquires also increased by 75% when compared to the same period a year ago. Number of agreed sales also exceeded the prior year’s figures in all three nations. Rightmove goes on to mention that “The market is now in full flow with 40,741 (44%) of the 92,085 newly listed properties in the first month after the English market reopened having already found a buyer, compared to 34% for the equivalent dates last year.”

If one looks beyond the relief being felt that the market has returned buoyantly, there are some warnings to be found; Halifax comments “Though only a small decrease [in June house prices], it is notable as the first time since 2010 – when the housing market was struggling to gain traction following the shock of the global financial crisis – that prices have fallen for four months in a row.”

Nationwide also report “Annual house price growth slowed to -0.1%, from 1.8% in May. This is the first time that annual house price growth has been in negative territory since December 2012” they go on to say, “the medium-term outlook for the housing market remains highly uncertain”.

Hometrack’s outlook is generally optimistic but still “expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021”

On balance our advice is that if you have homes to sell, bring them to the market as soon as possible and get buyer commitment. That will alleviate the impacts of any further lockdowns and help maintain momentum.

RENT MARKET OUTLOOK

This month we include reporting from Hometrack for the rent market. The market report shows that the “average UK rents fell by -0.3% in June, and by -0.8% in Q2, taking the annual growth in rents to +1.1%, down from +1.7% a year ago.”

It is further expected that rental growth across the UK (exc. London) is likely to slow down from +2.2% to the rate of 1.1% by the end of 2020. London rental growth is expected to weaken even further to as far as -5%yoy by the end of 2020.

Click here to view full report.