SECTION 1 – COMMENTARY
Welcome to the latest edition of ARK’s Market Synopsis report covering market outcomes to the end of March and with Rightmove picking up reporting for April.
We saw the market steadily gaining momentum at the start of the year and were able to issue very favourable reports in January and February. Post-election and with a Brexit (remember that?) at least certain, things did seem to be looking set fair for the market with modest and sustainable growth expected. Rightmove say “The buoyant start to the year before the lockdown saw the number of sales agreed in the year to March 23rd up 11% compared to the same period last year, which was the best start to a year since 2016” so pre-lockdown things were looking good.
Then COVID-19 took its effect on the housing market. In late March, the UK Government implemented a nationwide lockdown followed by the advice of staying home to help reduce the effects of COVID-19. Government advice to buyers and sellers and sensible precautions from valuers and others in the chain had the effect of dampening market activity.
Our March report was particularly bleak, and we are hoping that our predictions turn out to be incorrect. There is some evidence – see section 2 for a more optimistic take on the market outlook.
SECTION 2 – IS THERE SUNLIGHT?
The commentaries below all tell a similar story and present an uncertain future for house prices. Russell Galley from Halifax says, “much will depend on the length of time it takes for restrictions to be lifted, the pressure that has been exerted on the economy in the meantime and the effect this has on consumer sentiment”.
Sentiment, as we suggested in March, will be the driver for buyer decision making. We sense a very positive attitude in the professional colleagues we speak to, valuers, mortgage brokers, SO sales teams, as Robert Gardner of the Nationwide says “The raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a strong rebound once the shock passes, and help limit long-term damage to the economy”.
Even the RICS, who, generally, are the more pessimistic forecasters report “It is interesting to note that sentiment on the medium-term outlook for prices has proved a lot more resilient. Respondents currently expect price growth to average just over 2.5%, per annum, over the next five years. This remains closely aligned with the average five-year house price inflation projections seen over the past twelve months.”
But Rightmove caution “Low mortgage rates and major Government support are a positive but demand for housing in the coming months may be more seriously challenged by a deteriorating economic outlook that directly impacts employment levels for homeowners.” So, one cannot be wholly confident of finding buyers and achieving sales at list price.
However, Rightmove also say “Most sellers already on the market, and those with a sale already agreed, appear to be continuing with their plans to move once it has been deemed safe enough to do so”. Our own experience across several sales teams is that it has been possible to complete sales on purchases that were close to being completed pre-lockdown.
A number of colleagues anecdotally have said that enquiry rates are remaining high and that levels are barely different from this time last year. The NSG have reported that “enquiry numbers were holding, and some reports of increasing to very encouraging numbers with eager and committed customers. Alongside this, reservations are still happening across the country, with completions happening where appropriate within government guidelines.”
A number of lenders reacted strongly to the lockdown withdrawing products whilst evaluating their position. Since that initial reaction Halifax, Nationwide and Barclays have all now come back into the shared ownership market, albeit with restrictions.
With the return to the construction of new homes largely seeming to be happening in the next week or so we think the obvious next step will be to work out how viewings can be conducted safely. We have not found anyone doing that yet but do expect to hear of viewings starting around the time of the next report. By then it is likely that valuations will also have re-commenced so we might be looking at a more “normal” scenario. We certainly hope so.
Click here to download the report.