Market Insight: December 2020
There’s no doubt that the property market has experienced abnormally high levels of activity in recent months, and has continued to thrive despite the huge challenges posed by the coronavirus across the globe.
It has certainly been a tough period for many in the Wirral and Cheshire West area with harsher local restrictions in place since October, followed by a second national lockdown throughout most of November.
Given the odds have been stacked against the local property market being successful since the pandemic started, why have we seen record breaking activity levels for such a sustained period?
In many ways, property has provided a much-needed distraction from the events that have restricted us both locally and globally throughout 2020.
When the first lockdown ended and the property market re-opened, it was very much a case of navigating the unknown. Given the costs involved in acquiring property, would there be a real desire from both a buyer and seller perspective to kick-start the market again?
For many people, moving property is a necessary step to facilitate important life changes and events, such as marriage, having children, divorce and relocation. In most economic climates, these moves will still go ahead and keep the property market active, as we saw in 2008 following the market crash.
However, one of the key drivers behind moving or acquiring property is anything that involves a change in lifestyle. Examples of this could include moving to a different area, moving up or down the property ladder, or desiring a specific feature such as an office or garden.
Sales agreed across Wirral and Cheshire West have seen significantly higher numbers compared with 2019 (Rightmove 2019-20)
In theory, these moves could happen at any time and are likely to be influenced by factors including income, property prices, interest rates and property availability. Providing this criterion is met, activity in the property market will increase accordingly.
A number of factors emerged during the first national lockdown that hinted towards an active property market once it re-opened. Firstly, pent-up demand over the lockdown period meant there would be an injection of new stock to the market, providing much more choice for potential buyers. Many will have already made plans to move within the first few months of 2020, and will have all landed on Rightmove at a similar time.
Secondly, and perhaps most importantly, lockdown provided a great opportunity for an evaluation of those important lifestyle factors. As many people spent more time at home than ever before, it really highlighted a need for sufficient outdoor space; particularly when the weather was so pleasant during the summer months.
Alternatively, those who had been working from home, and perhaps still are now, will have craved their own office space. When it became apparent working from home would be a longer-term arrangement, setting up to work in communal living areas will have certainly made people look at alternative solutions.
The desire in the marketplace from both buyers and sellers was evident from the moment the market re-opened in May. It created a ‘snowball’ effect throughout the local area, such has been the confidence in the property market. All the ingredients were there for a short-term market boost, but that doesn’t explain why we are still experiencing such strong activity levels as we head into winter.
Even during the most typical annual cycle, the property market experiences peaks and troughs; very rarely does it become consistent and predictable in nature. Just examining November in isolation, there were 49% more sales agreed across Wirral and Cheshire West than in 2019; a month in which activity would normally start to reduce significantly.
Total sales agreed across Wirral and Cheshire West in November, by year (Rightmove, 2016-20)
The housing market is strongly linked to consumer spending, which is why the Government was quick to introduce the Stamp Duty Land Tax (SDLT) holiday in July. For residential property, any purchase up to £500,000 is exempt from SDLT charges until the holiday ends, which provides a huge saving for buyers should they exchange before 31st March 2021.
This Government initiative provides a strong incentive for those who don’t necessarily need to move in current climate; there are certainly many reasons why people would resist marketing their property right now. When you couple the SDLT scheme with the other lifestyle factors already discussed, it creates a market which contains both genuine desire and urgency to act.
At Karl Tatler Estate Agents we have facilitated 65% more viewings this November than in 2019, highlighting that buyers are still incredibly active and motivated by the SDLT deadline. If the levels of viewings that took place in November occurred in the busy Summer months, they would still be significantly greater than the typical levels for that time of year.
Total viewings facilitated by Karl Tatler Estate Agents in November, by year (Karl Tatler Data, 2016-20)
While the 31st March 2021 is still a few months away, the selling process from listing a property to exchanging will take several weeks to complete. The encouraging news is that buyers are clearly still very active right now, which means that coming to the market at the right price should result in strong interest.
There has been a fine balance between new stock and sales agreed in the local property market in recent months, but that balance tipped more towards sales in November as stock levels began to drop. While new properties are still coming to market in decent numbers, there were 21% more sales agreed in November than new instructions.
It is likely that December will see further reductions in market activity, but those who are still active will be proceeding with urgency as the deadline draws closer. As solicitors continue to process an unprecedented level of transactions, acting now will give you the best chance possible of benefitting from the stamp duty savings.
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