The housing market looked to be in a good place during the early part of 2020 and then Covid-19 shut it down for almost 7 weeks. Estate agents were given very short notice when they were told they were able to get back to work. Although this is fantastic news for the housing market and associated industries, ourselves included, and it is an important step in getting the economy up and running again, getting back to full strength will take a while.
Many estate agencies had to furlough staff and bringing them back into work will not be straightforward and will take time. Agents are paid, mostly, on completion of sales. Sales can take several months to complete as anyone who has bought or sold a property in the last few years will know, the process can be painfully slow. Paying staff as they return from furlough requires a steady pipeline of confirmed sales generating cashflow. We are expecting most agencies will have to phase their staff back in as the income from sales picks up. Those agents who are self-employed are pleased to have been able to fill their diaries very quickly.
Talking to many of the agents we work with, they are all experiencing high numbers of viewing requests from the public who want to get on and find a new home. However, we are still in partial lockdown with restrictions in place, so agents have had to come up with new ways of conducting viewings to keep clients and potential buyers safe. We are seeing lots of risk assessments being done ahead of viewings and virtual viewings are becoming the normal way of conducting a first viewing with only serious potential buyers actually going out to properties in person.
Agents are suddenly busy again with market appraisal requests which, for the majority, are being done virtually. This is a tool which we believe will become the norm in the future and is a very efficient method of providing clients with an initial appraisal of their property. Many agents adapted very quickly at the beginning of lockdown to provide virtual viewings which will be an enormous help in the future, not just now. These are proving to be a great way to qualify prospective purchasers and limit any risk in going to visit a property. We are now also seeing the rise of virtual open house events being conducted on Facebook and other platforms.
What do we think will happen to the property prices post lockdown? Do property experts think there will be a crash? Will raised unemployment have an effect? Although interest rates are lower, will finance be available? Views are mixed but most experts believe prices will drop in the second half of 2020 but will increase in 2021.
The Times, last weekend, reported that the forecaster Oxford Economics is not predicting a property market crash as long as the government continues with its support of the economy. Some of the larger estate agents have given their predictions on what will happen to London house prices – a good indicator for the rest of the market. Savills, using data from the Office for National Statistics, reported that property prices in London fell by 3.5% last May due to Brexit uncertainty but after December’s election result annual price growth returned to 2.3% in February. Last week the average asking price of all London properties was 2.5% higher than the same time last year. Both Savills and Knight Frank are predicting that the prime London market will fall by 5% this year. Knight Frank’s view of house prices nationwide is a fall of 7% this year with a regain of 8% in 2021. CBRE also predict a strong recovery in 2021, and Savills’ analysts are suggesting a mid-term price growth of 15% over the next 5 years. However, Gavin Brazg, the founder of the property forecasting tool, Propcast, had a different view and was quoted as saying “When the furlough money runs out, the demand won’t be there. I think we will have a big crash within 24 months”.
There’s been much talk during lockdown of some town and city residents rethinking their lifestyles – will those living in a flat with no outdoor space be hankering for a garden in the suburbs or the countryside? Does this mean that inner city flats and apartments, however beautiful, will have lost their appeal and even value? Henry Pryor, an independent buying agent is pessimistic. Speaking to The Times at the weekend he said “I wouldn’t want to be the owner of a shiny flat in a high-rise block strung out along the River Thames. I suspect that a flat that was worth £1.5million is today £900,000”. Only time will tell, and it will be interesting to look at the statistics once these extraordinary times get back to some form of normality.
In the meantime, we are really pleased to have heard from so many agents who have been desperate to get back to work and have been delighted by the levels of enquiries they are reporting.