It’s difficult to start any review at present without mentioning COVID 19. And as much as we’d wish we weren’t still living the “new normal”, we are, albeit with renewed hope that the vaccine rollout will be successful and the endless days of zoom calls, Netflix and banana bread will be over.
With that being said, the hope is real and thoughts of a return to some semblance of normality are finally in our minds.
For some, that will simply mean going back to their daily pre-pandemic life…, picking up a coffee on the way to catching the tube into the office with the hope of work drinks after a day at a desk, catching up on the gossip from friends and weekends in rooftop bars in the city, and long summer days in the park.
For others life has changed for the long term, with the lockdown allowing them time to think and reprioritise, with where and how they live often being high on the agenda.
Working from home, for at least part of the ‘usual’ working week is likely to become a more permanent fixture for many, giving them a decision to make. With there likely to be less time spent in the office, do they still need, and want, to be in the city, living the high-rise life? Or does raising rare breed sheep in between answering emails and looking after home-schooled children at your farm on Shetland offer more appeal?! Two extremes, but both as plausible as one another in these strange times.
We don’t fully know what befalls us this coming year, when lockdown will ease, what will happen when furlough comes to an end, what the new normal working week will look like and the implication of such on London’s population, what taxation changes (if any) will impact the property market, or if the stamp duty holiday will be extended, all of which will shape the property market, but we can inform you of what we’ve experienced in January and touch on our predictions for quarter 1 and maybe 2 (who knows!) of 2021.
Viewing levels in January started with a flurry but tailed off.
The new normal in property searching is very much remote/virtual/video in the first instance, allowing for properties to be ruled in or out, followed by a little more research into the area (where needed), and if still ticking the boxes, a physical more ‘traditional’ viewing (with guidelines followed so to help reduce the spread and keep all parties safe).
As such, as expected, the number of physical viewings were greatly reduced, the days of seeing multiple properties with multiple agents all in one afternoon are gone, for now.
Guidance from the government was, and is, to stay at home unless essential to do otherwise. But with the housing market allowed/able to remain ‘open’, with strict but sensible guidelines, a number of the hardiest buyers were still prepared to venture out with hope of finding their dream home, with the added incentive of still (possibly) being able to beat the Stamp Duty Holiday deadline (currently set to end March 31), so to benefit from the saving.
With this crop of buyers being so focused and working to a deadline, offers and agreed sales didn’t allow transaction levels to drop and the early January market was somewhat of a continuation of the busy Q4 2020 market we witnessed.
As the month rolled on, buyer enquiries slowed.
Perhaps due to the new waves of the virus which seemed to be more aggressive, perhaps because of the realisation from buyers that they will no longer be able to complete a sale before the Stamp Duty Holiday deadline ends (and therefore not make the savings they’d hoped), but more likely and what we’ve certainly found, was and is, that the more desired/sought after* and well-priced property stock is now under offer….to the ‘hardy’ buyers, so reducing the more saleable properties and the most heart set buyers,… naturally leading to less activity.
(*The ’more desired’ properties more often than not feature space, more specifically more of it….to breath, to live, to allow for home working and home living, and of course, perhaps the most important space….outside space, which is now a real priority and feature on most people’s wish list, ideally in/with the property, but if not, then open green space close by in the shape of parks, river walks etc., etc).
Further, with many vendors/Sellers holding off advertising their homes until lockdown restrictions are eased, partly on the back of agents’ advice, buyers are now awaiting a fresh wave of listings in the early spring (should restrictions begin to be eased, on the back of success from the vaccines, which will trigger such).
This could coincide with the decision (possibly in the 3 March budget) to prolong the stamp duty holiday into the summer (as this article is being written the partition to have it extended is being debated in parliament). This is causing uncertainty/holding off for some buyers who are eagerly awaiting the outcome, which, either way is likely to bring buyers back to the market. It is the uncertainty that often holds people off making a decision rather than the outcome.
We are expecting the Spring/Summer market of 2021 to be a very busy one.
From the daily conversations we are having with ‘waiting sellers’ and buyers, who have been ‘re-evaluating priorities’, and are desperate to upgrade their homes in an attempt to make them more suitable to their specific, individual “new post pandemic normal”, it is clear we’re gearing up for a hectic time ahead.
The pent-up desire of 3 lockdowns (and Brexit before that) has not been fully purged.
January rental market review:
Similar to the sales market and as expected, physical viewing levels were lower than in previous years, thanks in part to ‘virtual viewings’, but again, in their similarities to the sales market applicant, those who chose to venture out were keen to get a deal agreed, with the majority of physical viewings resulting in an offer.
Living in London recorded its busiest December on record in terms of number of new move ins, the majority of which were agreed at rents approximately (but varying from property to property) at 10% lower than what we would have expected in a ‘normal’ market (due to a number of reasons). This level of activity continued into Jan 21.
Following on from tracking the trend of the sales market, applicant levels began to wane and agreed deals slowed later in the month, possibly for similar reasons - the more desperate, time burdened and keen tenants agreeing deals, which led to a fall in demand, and the well-priced more desirable properties being taken, thus decreasing supply. But more likely, the one difference we are seeing, and something I think we’ll continue to see, especially after 2020 where rentals prices went through the largest adjustment in sometime, is the repositioning of tenants in the same or similar areas. It has always happened, but never to this extent and certainly not for this reason.
What this lockdown has afforded us is time; time to read that book that’s been sat on your bedside table for the past year, time to finally get around to that DIY you didn’t finish in the first lockdown because drinks on the balcony in the sun were that little bit more appealing, but also time to browse the web for a new flat, especially as more time spent at ‘home’ has made us realise what we have is perfect…or not! Some might just have been curious, but when that search brings up that two bedroom flat with the lovely terrace you’ve walked past and always admired, and now it’s being advertised at not much more than what you’re paying for your one bedroom with no outside space, why wouldn’t you at least book a virtual viewing?! Afterall, you can do it from your sofa.
I feel this trend of movement within areas will continue until the market adjusts again.
This adjustment will occur by every other tenant renting a similar apartment in the block, paying a similar rent, also noticing the same advertisement.
Multi-viewings occur and an above asking price offer accepted; the new price is set for that market (or at least that property) which will remain until the next adjustment. Market powers at work.
I could now lead on to writing in more depth about the tenants who have chosen to leave London altogether, the briefly touched upon changes which will no doubt occur to the office workers daily life, flexible hours, working from home, and in some cases those who are stepping away from that type of employment altogether. But for as many people we are speaking to who are enjoying their newfound working from home freedom, who are considering (or actioning) moves out of the city, we talk to just as many (increasingly so as time and lockdowns rack up) looking forward to getting their routine back and separating home from work again (for at least a few days a week), including the distance between the two.
The January market has again shown us how robust the London property market is, and that fundamentals still apply. Engage a good, well reviewed agent, take their advice on pricing and present the property well. If you follow this advice, you’ll find a buyer or tenant in any market. Even one where your marketplace is in lockdown.
If you are thinking of selling, letting, buying or renting a property or would like more information on the current property market in London before taking the plunge, get in touch for a no obligation chat: 0207 231 0002, firstname.lastname@example.org