Worcester, Droitwich & Malvern Market Update – September 2020
Tax deals, pent-up demand and even a lack of holidays may have contributed to the busiest month in the property industry for at least 10 years, according to the latest data from Rightmove’s monthly House Price Index, which covers around 95 per cent of the market.
Miles Shipside, housing market analyst and director at Rightmove said, “Home movers are both marketing and buying more property than we have recorded in any previous month for over 10 years. Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there is also additional demand due to people’s changed housing priorities after the experience of lockdown.
Zoopla report homes are selling at a faster rate across all regions and countries. At a UK level homes are selling in 27 days, this is 31% lower than the same three-month period last year and reflects the strength of demand. The cumulative increase in buyer demand since the start of the year is +34% higher than the same period in 2019.
The near-term economic outlook is important in the context of activity but the impact of the lockdown presents a sizeable counter weight to a weakening economy. This is especially true given the level of equity in the housing market and how many households are mortgage free.
LOCAL MARKET ROUNDUP
Over the last twelve months, there have been 4,145 sales in the WR postcode area, this is 20% less than the previous year. In Malvern, where we are getting closer to opening our third office, a 21% reduction in the volume of transactions resulted in 557 sales, reflecting to the impact of COVID-19. While 541 sales in Droitwich Spa represents a lower year on year reduction in activity of 16%.
Droitwich and Malvern have similar average prices, in the region of £255,000 however, in Worcester, where 43% of the sales took place, the average sales price is £222,989, 12.6% lower.
The Lettings picture is similar with the average rent achieved in Worcester lowest at £568, Malvern is 24.2% higher at £704, 10.5% above the WR postcode area average of £637 with Droitwich Spa remaining highest at £734, 15.2 % above the postcode area average. After a period of steady growth, based on the average figures over the last twelve months, growth has been maintained Malvern whilst both Worcester and Droitwich have dropped back slightly.
The July Sentiment Survey by Royal Institution of Chartered Surveyors, gauging the mood of agents, showed a significant pick-up in the housing market.
The stamp duty holiday has increased demand in July; agents report a significant increase in new buyer enquiries and new instructions. Agreed sales have also risen, indicating recovery in transaction levels.
House price growth moved into positive territory for the first time since March. +8% of agents expect house prices to increase over the next 12 months. Source: Dataloft, Royal Institution of Chartered Surveyors.
On a month-to-month basis the UK economy grew by 8.7% in June after 1.8% growth in May. The economy shrank 20.4% between April and June. Two consecutive quarters of decline have caused the UK into a recession.
The Bank of England scenario, based on no second wave and a smooth transition to a new EU free trade deal, expect the economy to shrink by 9.5% in 2020 and to return to pre-Covid levels by the end of 2021. Unemployment rates are expected to almost double by the end of the year. Interest rates will stay at 0.1% or below for at least five years.
According to ONS, average rental values across the UK rose by 1.5% in the year to a June (IPHRP) and Zoopla report a 1.1% annual increase in June.
RICS June survey reported tenant demand returning to growth for the first time in 3 months and landlord instructions were broadly steady following a few months of decline.
According to agents short-term and medium-term, rent expectations are modestly positive, 1% growth over the year ahead expected (RICS)
Housing Secretary Robert Jenrick has announced renters affected by coronavirus will continue to be protected after the government extended the ban on evictions for another 4 weeks, meaning in total no legal evictions will have taken place for 6 months,
The government also intends to give tenants greater protection from eviction over the winter by requiring property owners to provide tenants with 6 months’ notice in all bar those cases raising other serious issues such as those involving anti-social behaviour and domestic abuse perpetrators, until at least the end of March. The government will keep these measures under review with decisions guided by the latest public health advice.
As a result, according to independent research, 87% of tenants have continued to pay full rent since the start of the pandemic, with a further 8% agreeing reduced fees with their landlords. The vast majority of landlords have shown understanding and leadership, taking action to support tenants.