What You Should Know About The Housing Market Now
Can you describe what lockdown was like for the property industry?
To be honest, pretty surreal. Everything just stopped. We’d been through a global crisis before; we signed the lease on our first office on the day Northern Rock went bust as the 2008 financial crisis kicked off, and our first couple of years were mayhem. But back then it was incredibly frantic and, if you like, sort of noisy. There was plenty of dashing around and a maelstrom of opinion and information crashing in from all directions. This time, there was just this eerie silence and a sort of paralysed inactivity. We couldn’t do anything – no viewings, no valuations, no actual human interaction.
However, in 2008/2009, the global financial system was fundamentally broken. Banks literally stopped functioning – massive international financial institutions were going bust, countries were teetering on the edge of bankruptcy, the very concept of Western free market capitalism was facing an existential threat. With Covid, our underlying thought was “this too shall pass”. The system wasn’t broken, it was just in suspended animation, and the underlying market fundamentals had not changed; the pent-up demand resulting from four years of Brexit nonsense, ultimately, still needed satisfying.
And what about now – how are things?
It really could not be more different. We have literally never been busier in 12 years of operating. In the four months since we came out of lockdown, we have done twice as much business as in the same period last year. We are now expanding, both in term of personnel and office space.
But will the demand we’re seeing now continue?
I believe that it will, although in a slightly moderated form. The market from May through to August was a very good one, in that it was nicely balanced with fairly even numbers of very committed buyers and sellers, all pushed forward by the end of Brexit dithering, and the subsequent cessation of lockdown – and squeezed backward by the impending gloom of a second wave, a potential recession, unemployment and actual Brexit. Everyone in the market just wanted to get it done and move home.
The bubble is now beginning to deflate as news of the good market hits the national press. It seems that eager (and greedy, perhaps) sellers, in collusion with desperate (and unscrupulous agents) are over-supplying the market with expensive property, upsetting the nicely balanced supply and demand balance back in favour of the buyers. Unlike before, we now have less commitment and more speculation.
In your view, is now a good time to be moving?
Yes. Even bearing in mind what I have just said, you’ll find a good buyer and/or a good property pretty quickly. The underlying high quality of the market has not really changed. It is harder, less efficiently rewarding work for us, but nevertheless still rewarding.
What advice do you have for sellers?
Three things – price, price, price. As I say, the market is still there and there are lots of very good buyers around, but they now have a big choice – there are 100% more houses on the market in our area now than there were in June, but we have registered only 60% more buyers. But this comes after the perennial first rule – choosing the right agent. In the first six weeks post-lockdown we were averaging 100.27% of asking price, now it’s 99.16%. So, it’s still pretty damn good.
And buyers?
Be patient. There is increased choice, and therefore a lot to look at, but there are still plenty of very good homes to buy at sensible prices owned by committed vendors. Just beware of speculative prices and therefore attendant flaky sellers.
Are buyers or sellers in the better position?
It’s pretty even, with buyers having the slight upper hand. However, if you are after a best in class i.e. a south or west-facing garden, beautiful refurb on a good road, and in a decent catchment area, you will still have to fight, and pay for it. Currently, such things are at, or near, an all-time high. And if you look back at the percentages of asking price achieved, you can see the role competitive bidding has played.
Are certain properties selling better than others?
Anything of quality is selling quickly and well. But I guess the best sellers (as ever) are four- to five-bedroom Victorian terraced houses, with the right orientation, in excellent nick, in the right catchment, and the £1.5m-£1.75m price bracket. Also, the larger houses with larger gardens and more lateral living space in the £2.5m-5m are selling better than they have for six years or more.
Lockdown made people realise the importance of living space, working from home zones and, of course, gardens. In an area of vertical Victorian living on small plots, such homes have high scarcity value. People are jumping from two to three-bedroom flats (usually under £1m) straight up to £2m houses with big living space and gardens. This trend first emerged after the stamp duty changes in 2014, but with four years of reduced market flow created by the Brexit anxiety, combined with three months of lockdown, cash-rich, super-motivated young couples have come to do battle.
It’s difficult to single out specific areas as different boroughs tend to be driven by the same socio-demographic groups. Different sections of one drive different sections of the other, too e.g. the young city whizz kid, the bank of mum and dad, and the wealthy local investor drives the flats, while the young newlyweds drive the mid-range houses, the expanding families drive the middle, and the divorcees, downsizers, distressed, and country-bound drive everything else. As mentioned before, it’s about quality homes (of any description) in a quality part of London.
Is now a good time for first-time buyers?
Yes. There’s a lot of choice and of course, currently, there’s a stamp duty holiday up to £500k. That’ll get you a one bed with no outside space in south London.
But lots of families seem to be moving out of London – would you agree?
There has been an increase in people leaving, but maybe it’s just a case of some people deciding to go earlier than they otherwise would have. If it were truly affecting the market, it would show up in selling prices (not asking prices), and these are, across the board, matching or very close to, all-time records.
You're a relatively small, independent estate agency versus the likes of Savills/Knight Frank. What do your clients get from you they don’t from the bigger agents?
Quality of staff – full stop. This leads to quality of service, and ultimately, to price achieved. Our sales negotiators have, on average, over nine years’ experience in estate agency. We are selling someone’s most financially, and often emotionally, valuable asset, and they want someone who knows what they’re doing. Since the stamp duty changes in 2014, and after four years of Brexit anxiety greatly reduced the market flow, estate agency has become less profitable for the big boys, and there’s been restructuring across a lot of them. That mostly means cost-cutting, and when a large corporation cost-cuts, we all know who usually picks up the tab – the consumer.
Our number one priority is people. If you treat everyone you interact with – colleagues, clients, contractors, you name it – with integrity, kindness and respect, you will do a good job and earn good money. We have the best staff because we treat them in the best way. A fact that might reflect this: in over 12 years of business we have never lost a colleague to a rival agent (and in an industry as fluid as that of estate agency that is pretty remarkable). This would suggest to me that if you want to be an estate agent in this part of London, you want to do it with us.
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