Worcester, Droitwich & Malvern Market Update – August 2020
COMMENT
PwC reported an increase in consumer sentiment in June, with the majority of households so far unaffected financially by Covid-19 and 1 in 5 households are saving money. On super Saturday when the shops and hospitality venues reopened there was a 20% weekly increase footfall and after 5pm this rose to 36%.
With more money in consumers’ pockets, VAT reductions for the hospitality industry, and the creation of the eat out to help out scheme, we expect high street footfall will continue to increase. Source: Dataloft, PwC.
Miles Shipside, of Rightmove, has reported, since the stamp duty holiday announcement, there has been a 49% surge in calls and emails to agents for homes priced between £400k and £500k as part of an overall uplift of 14%. Sales agreed in the week following the announcement saw the biggest annual increase in the upper end sector, up 54%, compared to an overall average of +35%. The enquiries are thought to be a mixture of people looking in new areas, to see what they can now afford, changing their search criteria to bigger, slightly more expensive homes, and new movers coming into the market because they now have enough extra budget to move home.
The stamp duty holiday is having a positive impact locally and with Worcestershire having so much to offer the activity levels have certainly increased. Call us if you want to know more.
LOCAL MARKET ROUNDUP
Over the last twelve months, there have been 4,212 sales in the WR postcode area, this is 22% less than the previous year. In Malvern, where Nicol & Co are soon to open their third office, this 22% reduction in the volume of transactions resulted in 561 sales, reflecting to the impact of COVID-19. While 553 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 £256,000 however, in Worcester, where 42.8% of the sales took place, the average sales price is £226,540, 11% lower.
The Lettings picture is similar with the average rent achieved in Worcester lowest at £576, Malvern 20.8% higher at £696, 8.8% above the WR postcode area average of £640 with Droitwich Spa remaining highest at £751, 17.4 % 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.
Source: Dataloft Market Rental Analysis (rental data is based on achieved rents for approximately 10-15% market share, depending on location).
NATIONAL MARKET
The UK went into lockdown on the 23rd March, and according to ONS the average price of a property sold in the UK was £231,855, 2.1% higher than a year ago. This represents a strong pre-Covid market.
ONS have temporarily suspended the house price index. However, in June while Nationwide reported a -0.1% annual decrease the Halifax reported a 2.5% annual increase in house prices. According to Rightmove, average asking prices are 2.4% higher than in March pre-lockdown.
According to the Office for Budget Responsibility, in the upside scenario, house prices will be stable in 2020 and rise by 4% in 2021. Both the upside and central scenario anticipate strong price growth in 2022.
ECONOMY
The Bank of England expect average weekly earnings to shrink by 2% and unemployment is on track to rise from 4% to 9+% this year. Inflation rate is at a 4-year low, 0.5%, due to a 16.7% fall in fuel prices, as well as declines in clothing and footwear. Inflation is expected to fall to zero at the start of next year and remain below the 2% target for the next 2 years.
On 8th July Rishi Sunak announced a £30bn plan to protect employment: a stamp duty holiday on all property sales under £500,000, bonuses for companies that retain furlough staff, a reduction in the rate of VAT alongside an eat out to help out scheme to support the hospitality sector.
LETTINGS MARKET
Average rental values across the UK rose by 1.5% in the year to June (IPHRP), the highest annual growth currently is in Northern Ireland, 2.6% and the lowest growth was in the North East and Scotland, 0.6%.
The RICS June survey reported tenant demand returning to positive 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).
The rental market is about to enter its busiest time of the year. Analysis from Dataloft Rental Market Analytics reveals that 40% of tenancies are set to expire in July, August and September.
Usually the surge in activity is a combination of students seeking accommodation, graduates starting new jobs and families looking to settle into new homes for the next academic year.
Post lockdown other factors may influence homemovers; more green space, closer to friends and family and a home office.
With 14% of tenancies set to expire in July, 16% in August and 10% in September, agents look set for a busy summer, whether renewals or new tenancies.
Source: Dataloft Rental Market Analytics and Dataloft Homemover Survey