21 June 2020

RETFORD Property Market News - June 2020

21 June 2020

A brief look at what is happening in the UK property market and what it means for the Retford and North Nottinghamshire market.

What has been happening in the property market in the past few weeks?

As we begin to come out of the lockdown the outlook for the housing market is still taking shape, but here I take a look at three market indicators to watch.  From buyer sentiment to Bank of England forecasts, higher loan-to-value mortgages and first-time buyers, here is how I think these key factors will influence the market:

Mover Decisions

Some 60% of prospective home movers say they intend to continue with their plans despite the impact of Covid-19, according to a recent Zoopla survey. Some 22% said they were not affected by the pandemic, while the remainder said they had felt the impact, but wanted to continue with their next move regardless.

The extent to which buyers and sellers continue with their plans will also determine how many of the 373,000 sales stalled due to lockdown will go on to complete, and this will affect the level of total transactions this year.

After weeks of the market being in suspension, buyer demand in England after the housing market opened on 13 May rose by 88% in a week, suggesting that there will be a flurry of activity for some time. This is according to the property industry reports.

It is possible that post-lockdown demand is also spurring more activity among those who had no previous plans to move as people have spent so much time in their homes over the last two months - prompting a change in view in how and where they want to live. In effect, it could have created a one-off Covid-19 bounce. I’m sure many people will be saying ‘’We need a bigger house.’’

The Economic Outlook

The current projections from the Bank of England signal that UK unemployment will rise sharply and that the economic output for the UK will fall significantly. But still remains unknown if this gloomy outlook will become reality. Remember what the Bank of England told us about Brexit. 

The housing market is certainly better placed to weather an economic downturn than after the financial crisis however, given the stricter mortgage lending criteria and stress-tests that have been in place for the last ten years. These have helped build an equity cushion in the housing market right across the country.

Availability of Mortgage Finance

Interest rates are still at record lows, (Just have a think about that). Which means borrowing money is cheap now, so it may be a good time to buy, as you will pay a reduced cost for the pleasure of borrowing money to buy that investment. It can be very hard to accurately predict what interest rates or property values will do, so these shouldn’t be deciding factors – but they are worth considering.

Alongside stricter lending criteria, a wider range of higher LTV loans started coming back to the market in recent years, allowing a greater number of first-time buyers (who can pass affordability tests but who do not have access to large deposits) to climb onto the property market.

However, as lockdown started, and the mortgage lenders turned their attention to dealing with the welcome move to mortgage holidays, new lending levels started to decline, and the range of mortgages on offer contracted.

As the market enters the next phase, first-time buyers who are keen to progress will still need access to higher LTV loans or they will have to step back from the market while save more money for a deposit. Alternatively, they may look to take advantage of the Help to Buy scheme on new homes.

These factors together will help determine the future path of the housing market in the months to come

The average time between a house sale agreed and exchange/completion of contracts on a sale (i.e. the keys and monies get sorted) is 8 to 12 weeks, which means buying today would mean you wouldn’t be getting your hands on the property until late August or September at the earliest. I know there are many inside the property industry that are already working on a campaign to significantly reduce the waiting time from sale to completion. I’m sure people are tired of the old process of waiting for the various agencies to do their bit and adding to the time delay. I faster system will be coming soon I’m sure.

The property portal Rightmove stated that people going to their website initially dropped by 40% at the start of lockdown, but now has recovered with a near doubling of people searching for properties with gardens (for both sales and renting).

I know there are a few doom mongers in the National Press spouting about a massive crash in the UK property market. There is a natural tendency for newspapers to latch onto the worst-case scenario in any economic forecast. Who can forget the country received similar projections in the lead-up to the 2016 Brexit vote with HMRC itself stating that UK house values would drop by at least 10% in the first 12 months should the UK vote for Brexit and 20% in two years!

With the rollercoaster of the stock market in recent months, investing your money into good old-fashioned bricks and mortar has started to seem a good place again.

Buying a property for investment means you have a tangible asset, something you can touch and feel (and understand). The returns from investing in property come from both capital appreciation and income from the rent, and yes whilst property values can go up as well as down, successful buy to let landlords are inclined to take a long-term view on their property investments.

Isn’t it funny the newspapers aren’t latching on to some reports to say the property market might go in the other direction? Remember – bad news sells newspapers!

So, what will happen to the Retford and North Nottinghamshire (and UK) property market?

To be honest – nobody knows. What I do know is the Swine Flu in 2009 caused some volatility in the UK property market, but the market stabilised within months. Even in disaster scenarios such as the current one, property remains comparatively stable and will continue to be one of the best places to invest in.

Yes, we could see unemployment rise in the next 6 months (yet the Furlough Scheme has been extended until the autumn) and historically, it has been proved house price falls are not caused by high unemployment; yes GDP will drop drastically because of lockdown yet it could bounce back like it has in China; yes, the number of property transactions might drop, yet that will only really effect the pockets of  removal people, solicitors and estate agents and the Chancellor of the Exchequer in lost stamp duty receipts; yes there is £82bn worth of property sales on ice during this lockdown (some of which might not complete) ... it’s all ifs, buts and maybes.

We will get over this current predicament, humanity shifts to become more productive - it’s the way it’s always been

The national debt at the end of the Napoleonic Wars of 1815 in today’s money was an eye watering £4.42 trillion and even with the eye watering borrowing to fund Covid-19, it stands at £1,821.3 trillion – we have been here before and we will come out stronger.

The Bank of England failed in 1825, yet we recovered stronger, the Great Depression of the 1930’s cut the Stock Market by 90%, yet we recovered, WW2 took national debt to 200% of GDP – yet we recovered, the oil crisis quadrupled oil prices in the 1970’s – and we came back …. the list goes on with hyper-inflation in the 1970s of 25%, mass unemployment in the 1980’s, Black Monday in 1987, Dot-com bubble in 2001 and credit crunch in 2008/9.

With every economic crisis, the long-term effects of them make people look at their decision making differently

The simple fact is for decades, demand for homes has outstripped supply – hence why property values have remained so strong. People are living longer (71.1 years in 1960 and 81.1 years nowadays), the mass exodus of EU nationals has not taken place since Brexit and the birth rate has increased by 9.1% since the Millennium, which means since 2000, the country has needed at least 240,000 households more per year to satisfy the demand. On average, we have only built 150,000 households a year, meaning we have a shortfall of 90,000 households each year for 20 years … a true shortfall of 1.8m households ... and until we start building anything over that 240,000 requirement … demand will always outstrip supply – and we all know what happens to prices when that happens!

OK so what about the Retford Area?

This is the current situation in North Nottinghamshire. I will mention Retford, Worksop and Harworth and Bircotes areas as examples. First looking at actual sold prices for properties and then looking at current asking prices.

In my area of North Nottinghamshire (my area, might be interpreted differently by others so I am talking here about postcode areas DN22, S80, S81, parts of NG22, DN10, and DN11) in 2019 there were 2,614 properties sold. Most of these sales, 46% were in the Worksop area. The Retford area accounted for 24%, Harworth & Bircotes 11% and the remaining villages together made up 19%.

House Prices in Retford (actually sold)

Properties in Retford had an overall average price of £194,688 over the last year.  The majority of sales in Retford during the last year were detached properties, selling for an average price of £283,626. Semi-detached properties sold for an average of £145,085, with terraced properties fetching £115,166.

House Prices in Worksop (actually sold)

Properties in Worksop had an overall average price of £173,658 over the last year.  The majority of sales in Worksop during the last year were semi-detached properties, selling for an average price of £141,989. Detached properties sold for an average of £250,537, with terraced properties fetching £100,532.

House Prices in Harworth and Bircotes (actually sold)

Properties in Harworth and Bircotes had an overall average price of £132,895 over the last year.  The majority of sales in Harworth and Bircotes during the last year were semi-detached properties, selling for an average price of £122,434. Detached properties sold for an average of £202,999, with terraced properties fetching £102,596.

What's on offer right now?

As of today 21 June 2020 we have 785 properties for sale across the area with an average asking price of £266,637 and 252 of those are currently under offer.

Please have a look at what’s currently on offer in the Retford, Worksop and Harworth and Bircotes areas.

If you need any help in finding a property or if you want a second/third opinion on a potential purchase, call me or send an email to:

geraldbowers@thegoodea.co.uk

01777 237310 Messages to 07981 744003 


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