Market Insight: October 2020
As another eventful quarter concludes, it’s time to reflect on what has been a very unique period for the Wirral and West Cheshire property market.
Demand for property in the area has been significantly higher than usual as more buyers emerge from the surrounding areas of Liverpool, Chester, North Wales and even Manchester.
The Government are actively trying to boost the UK economy as we continue the fight against coronavirus, including the property sector with incentives such as the SDLT (Stamp Duty Land Tax) Holiday. The question is, how has the local property market responded to these new circumstances?
Whenever there are an increased number of active buyers in the market, as there have been since Estate Agents re-opened following several weeks of lockdown, there needs to be sufficient stock available to satisfy demand. Failure to meet the demand causes intense competition between buyers which will lead to inflated prices in the market.
Volume of new instructions in Wirral & West Cheshire postcodes (Rightmove, 2019-20)
When reviewing market activity for Q3 (July to September), the number of new instructions across Wirral and West Cheshire have increased by 29.6% on the same period in 2019. CH46 (64%), CH47 (55%) and CH62 (61%) in particular have seen a huge rise in the number of new property listings on Rightmove compared with the previous year. In fact, all Wirral and West Cheshire post codes except CH41 (-13%) have seen an increase.
Andrew Schofield, Operations Director at Karl Tatler Estate Agents, has been reflecting on the unprecedented market conditions we now operate in locally.
“As the data suggests, since we returned from lockdown the market has been bubbling nicely and reached boiling point in August and September with the volume of applicants registering, market listings and sales at unbelievably high volumes. This has been the busiest period in our Company history by some margin and we continue to ride that wave into October.”
Volume of sales agreed in Wirral & West Cheshire postcodes (Rightmove, 2019-20)
While we saw a huge upturn in the number of new instructions across Wirral and West Cheshire in Q3, the volumes of sales have been even more emphatic. Across the region, the number of sales agreed on Rightmove in Q3 is up 48.6% on the same period in 2019. Every post code has seen a rise in sales activity, with CH60 increasing by a huge 125%.
There is little doubt that the prospect of avoiding Stamp Duty charges has really injected the market with buyers over the past three months, despite economic obstacles such as job security and tougher mortgage lending blocking the path for some. With 93% of the properties listed across Wirral and West Cheshire in Q3 exempt from SDLT, this was an opportunity too great to miss as sales rocketed in the area.
Market forces would suggest that where demand outweighs supply, prices will react accordingly. While the data suggests the increase in sales was significantly higher than new instructions on Rightmove in Q3, there were still more properties listed than sold in the period. Couple that with the stock that was already available before the SDLT holiday was announced and it shows there is definitely enough stock to meet demand; for now, at least.
Average new instruction price in Wirral & West Cheshire post codes (Rightmove, 2019-20)
While we won’t know the true impact of this demand on prices until the transactions reach Land Registry, the average listing price of property added to Rightmove in Q3 is up 8.1% on the same period 2019 across Wirral and West Cheshire areas.
Given the additional demand and the savings on SDLT for buyers, there is little surprise property is now being marketed at a higher price than before. The increase in market prices have done little to deter buyers, however, with many opting to pay close to or even full asking price to secure their next move.
CH43 (24%) and CH65 (24%) saw the biggest increase in average listing price, while CH48 (-9%) and CH64 (-6%) were the only areas to see a drop in Q3. If the volume of sales agreed continue to close the gap on new instructions, particularly towards Christmas, then prices may continue to rise.
Activity in the property market typically starts to cool from October as we approach the festive period. In 2019, new instructions across Wirral and West Cheshire dropped 47% from October to December, while sales agreed dropped 38% (Rightmove data, 2019).
However, the dilemma for those planning a move before the SDLT holiday ends on the 31st March 2021 is when to start the process. In a ‘normal’ market, the average time from sale agreed to exchange of contracts is around 12 weeks, although this varies drastically for each individual transaction. In Q3 this year, it took over 15 weeks on average to progress a sale through to exchange.
The consequence of such a buoyant market is the demand on solicitors to complete the conveyancing process in a timely manner. Given the typical timescale has already increased by three weeks, this is unlikely to start reducing as we approach the SDLT deadline.
In addition to the pressures placed on solicitors, Andrew Schofield suggests that sustained levels of activity have provided new challenges for Estate Agents:
“Accommodating appointments in a timely manner, dealing with enquiries in a prompt fashion and maintaining our high levels of customer service in the face of unprecedented market conditions have all posed huge logistical challenges. However, had somebody offered us this scenario back in mid-March when we closed the doors to our offices and waved farewell to our colleagues, we would have snapped their hand off.”
He also discusses the impact a strong property market has on the local economy and, in particular, the job market:
“We made the decision very early on to bring all of our staff back from furlough and have actually added to our staffing levels in the past few weeks. We are even in the midst of an exciting recruitment drive as we speak. We firmly believe in investing in our people and resources so we can continue to provide our clients with the level of service they have come to expect.”
The local property market has never been in a stronger position going into the winter months, and looks set to buck the usual trend of sharp activity decline over this period. There will be a sense of urgency in the market as people look to get their sales agreed well in advance of the Stamp Duty deadline to allow for a much longer conveyancing period. With that in mind, anyone who is considering a move to avoid paying Stamp Duty should be putting the wheels in motion sooner rather than later.
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