Average UK property prices fell by 0.1 per cent in June, the first fall in annual house price growth since December 2012, according to the latest survey from Nationwide building society.
However, before home owners panic and home buyers celebrate, context is extremely important, given the extent of the shock to the economy as a result of Coronavirus, it really is no surprise. Housing market activity slowed considerably during lockdown, although at PLG we carried on with viewings of empty properties where possible as our clients’ needs remained as urgent as ever.
One only has to look at the drop in mortgage activity to account for housing transactions falling off a cliff. With only 9,300 approvals for house purchase in May, down from 73,700 in February and 86 per cent lower than in May 2019, housing market activity has been decimated. Although PLG’s clients don’t need mortgages, plenty of buyers do and the fact that numbers have declined so dramatically illustrates just how devastating the pandemic and ensuing lockdown has been on the housing market and wider economy.
Despite this gloom, at PLG we don’t believe there is cause for panic. With lockdown measures continuing to ease in coming weeks, we expect housing market activity to pick-up. We have certainly been busy throughout lockdown and remain so as we strive to find the rental properties and forever homes that our clients desperately need.
The challenge the market is facing is lack of stock, which will likely support property prices to an extent in the longer run. We are certainly not seeing significant price reductions, other than those you would expect as part and parcel of the usual negotiations during a purchase, particularly where the survey throws up issues. Vendors don’t seem to be panic-selling and therefore desperate to take whatever they can get. Indeed, one west London agent we know well reports that the eight sales that fell through in the first week of lockdown have now all sold for more money. Elsewhere, the stock that is available is selling well, another agent, this time based in Widnes, received a call from Rightmove to check whether he really did sell 40 units in June. The numbers were so high compared with what was going on elsewhere that the portal wanted to check there hadn’t been an error.
Normally, we would expect to have more choice of property to show our clients so we are having to be more proactive than ever to ensure we are at the forefront of agents’ minds, preferably even before a property comes onto the market. Keeping up a regular dialogue with agents about properties that are about to come onto their books, trying to secure one-off viewings for rentals and purchases, and thinking outside the box, are all key to the PLG approach.
As with everything to do with the housing market, it all boils down to basic supply and demand. The question is whether there will be a surge in activity in September, a time of year which is traditionally busy for us as people come back from holidays rejuvenated and keen to move before Christmas.
We wait to see whether that pattern will be repeated this year…