Market Insight: April 2021
It has been a very eventful first quarter of 2021 as the nation continues to fight against the coronavirus pandemic; having a significant impact on our local property market. Some encouraging property news was announced last month as the Stamp Duty holiday was extended for a further three months, while guaranteed 95% mortgages would be coming back from April.
Prior to this announcement, it was becoming evident that stock levels across Wirral and Cheshire West were falling sharply as sales outweighed new instructions. Have these new changes, coupled with the easing of lockdown, had any impact on the local property market?
One of the key concerns for the local property market in recent months has been the lack of new properties appearing online in relation to the number of properties going under offer. This imbalance, prior to the Stamp Duty holiday extension being announced, would have caused further price increases when many areas had already experienced a significant rise over the past 12 months.
When comparing new instruction levels in the first quarter of 2021 with 2020, there has been a 6.9% rise in activity. This is certainly a step in the right direction towards injecting the market with new stock, although the figures for 2020 do include a short period of lockdown in March where no property activity was permitted.
On the whole, most postcodes across Wirral and Cheshire West have seen an increase in stock levels; CH44, CH46 and CH48 in particular have massively boosted their new instruction volumes this quarter.
The original SDLT deadline of 31st March will have put many potential sellers of coming to market in the early weeks of 2021 as finding a buyer and having the process completed within that window would have been unrealistic for the majority. Instead, those who already had their property on the market, or didn’t need to sell before buying, will have stood the best chance of making the deadline.
New instruction levels in January and February this year were, unsurprisingly, much lower than usual for the start of a new year. However, a huge 46% increase from February to March is certainly welcome and hopefully a sign of continued growth and sustainability in the local property market.
Without the immediate threat of the SDLT deadline, the pressure has been lifted and gives many potential sellers a very strong chance of making their move.
Sale volumes continue to surge
While new instruction levels got off to a sluggish start in 2021, the same could not be said for the volume of sales agreed recorded across Wirral and Cheshire West.
A staggering 29.4% increase in the volume of sales agreed on the first quarter of 2020 shows just how active the market has been in recent months. Given most will have been working towards the original deadline of 31st March to avoid Stamp Duty charges, it is little surprise that buyers continued to drain stock levels even further.
In addition to the extension of the Stamp Duty holiday deadline, guaranteed 95% mortgages will start emerging in April which is fantastic news for first time buyers; many of which will have missed out on their dream purchase in recent months as lenders tightened up their criteria. This move should open up more of the property market, which has been relatively concentrated at the ‘higher’ end since the first lockdown ended last May.
Will stock levels balance out?
It is hard to know to what extent stock levels will replenish in the coming weeks and months, but the Stamp Duty holiday extension has certainly provided an opportunity for a much healthier balance between new stock and sales agreed in the Wirral and Cheshire West property market.
Looking back to May last year, when the property market reopened following the first national lockdown, 61% of market activity was new instructions. Many of these new instructions will have been prepared for market during lockdown, but there appeared to be a lack of drive for buyers as we entered a period of economic uncertainty.
The first SDLT holiday announcement in July provided that reassurance and stimulated the property market in a very positive and healthy way. By September 2020, the ratio of new instructions to sales agreed was roughly 1:1; a balance which allowed buyers adequate choice of property yet still enough demand to encourage sellers.
However, as you can see from the above chart there have been four consecutive months where the volume of sales agreed have exceeded the new listings between November and February. Once again, a government intervention appears to be having the desired effect as the volume of new listings in March exceeded sales agreed following the extension of the Stamp Duty holiday deadline.
It remains to be seen whether this is just a temporary bounce in the local property market, but signs are certainly indicating a much healthier balance of buyers and sellers for many weeks to come.
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