Worcester, Droitwich & Malvern Market Update – January 2021
Whilst the cloud of Covid -19 may still be hanging heavily over us, news that vaccination programmes have begun and a Brexit deal has been pulled out of the hat at the last minute should allow us to approach 2021 with more optimism than expected just a few weeks ago.
What will the New Year bring? Who knows you might say after 2020 but so far as the residential housing market is concerned, Dataloft consensus house price forecast, based on the average from five leading commentators, expects 0.9% growth 2021. Published forecasts range from mildly negative to Rightmove, the market leading portal, forecasting a 4% rise in 2021.
We do know 2021 will play host to a lot of changes and deadlines which will impact transaction volumes and house prices to some extent. The stamp duty holiday deadline, changes to Help to Buy, potential changes to Capital Gains Tax and a 2% surcharge for overseas purchasers to name but a few.
Thankfully resilience is one other thing we can be sure of, having had it tested in unprecedented ways during last year. Whilst we may have some more pain to endure in the early months of 2021, when we look back in twelve months’ time hopefully Covid-19 will be a distant memory.
LOCAL MARKET ROUNDUP
Reflecting the impact of COVID-19 over the last twelve months, there have been 3447 sales in Worcestershire, this is 32% less than the previous year. In Malvern, a 25% reduction in the volume of transactions resulted in 512 sales. 469 sales in Droitwich Spa represents a year on year reduction in activity of 28%.
Average house prices in Droitwich sit at £264k with Malvern at £243.5K. In Worcester, where 41.4% of the sales took place, the average sales price is 8.8% lower at £222K.
The Lettings picture has changed over the last twelve months with a 17% increase in the Worcester average to £708. Malvern is now lower at £687, and below the Worcestershire average of £756 which has risen by 16%; Droitwich Spa remains highest at £734
Source: Dataloft Market Rental Analysis (rental data is based on achieved rents for approximately 10-15% market share, depending on location).
115,190 transactions (seasonally adjusted) were recorded in November 2020, 19.3% higher than 2019 (HMRC). In 2020 there have been 9% more new sales agreed than in 2019 (Zoopla). Sales take between 3 and 4 months to complete and therefore a proportion of these will complete in 2021.
In October the UK HPI (ONS) reported a 5.4% annual increase in house prices. The East Midlands, North West and Yorkshire and The Humber had the largest annual increase (6.6%) and the East of England had the smallest (3.4%). The RICS November Survey continues to report a significant degree of upward pressure on house prices, with the latest net balance +66%, broadly unchanged from October (+67%).
Covid-19 has caused the UK economy to shrink by 11% in 2020. The Office for Budget Responsibility expect the economy to recover to pre-Covid levels by the end of 2022.
Support for public services, households and businesses cost £280bn this year, pushing the deficit to £394bn and debt above 100% of GDP. £20-30 billion in spending cuts or tax rises is required to balance revenues and day-to-day spending and stop debt from rising by the end of this Parliament.
The number of unemployed people is set to reach 2.6 million by the middle of next year, meaning the unemployment rate will hit 7.5%, the highest level since the financial crisis in 2009.
According to Office for National Statistics average rental values across the UK rose by 1.4% in the year to November 2020. The South West had the largest increase (2.3%) and Scotland had the smallest increase (0.6%). RICS November survey reported +3% net balance of agents reporting an increase in tenant demand, the lowest reading since May 2020. New instructions to let a property decreased to -19%, a continuation of the pre-lockdown trend.
Near term rental growth expectations remain slightly positive, most parts of the UK anticipate an increase. For the third consecutive month, London is a clear exception, where a net balance of -63% of respondents expect rents to fall over the next three months (RICS).
COVID SECURE VIEWINGS
Moving House is still permitted under the latest lockdown restrictions. Nicol & Co has operated safely and securely throughout the previous lockdown periods and will continued to do so. We have Covid Secure procedures and policies in place to ensure we operate safely reducing social contact and the risk of spreading the virus.
If you have any questions, please contact us.