Worcester, Droitwich & Malvern Market Update – July 2020
As some economists have observed, and one or two even predicted, the impact of Covid19 on the housing market has been as unprecedented in its nature as the severity of virus has been elsewhere. Like never before the economic impact has been like hitting the brakes hard and finding yourself caught in a tail back until the obstacle is removed. For us the obstacle was removed on the 13th May when lockdown was first relaxed and thankfully the traffic is flowing freely again now as recent figures in this update reveal.
As we enter July more businesses will be experiencing their new normal for the first time as activity levels on our high streets increase as we begin to socialise again. Many have used their time in isolation to review their situation and perhaps even get their house in better order. We have also chosen to do that here and feel better prepared for the future as a result. Rather than sit on our hands we have adapted and innovated by introducing Livestream viewings to our offer and this month we shall launch another unique service offering.
We expect our Ready to Buy service to appeal to homeowners who are quite happy where they are but know the time is coming when a new home will suit them even better; we also understand they may see the whole process as a little bit daunting. If that’s you and you need help to find what you are looking for we are here to help. For more information, call us on one of the numbers below.
- We’ll get you ready
- We’ll search for you
- We’ll negotiate for you
- We’ll make it happen.
LOCAL MARKET ROUNDUP
Over the last 12 full months, there have been 4,433 sales in the WR postcode area, this is 17% less than the previous twelve months. In Malvern, where Nicol & Co are soon to open their third office, the same reduction resulted in 596 sales. 575 sales in Droitwich Spa again represents a year on year reduction in activity of 14% due to the impact of COVID-19.
The Lettings picture is similar with the average rent achieved in Worcester lowest at £582, with Malvern 18.4% higher at £689, 7.3% above the WR postcode area average of £642. Droitwich Spa remains highest at £762, 18.7 % above the postcode area average. After a period of steady growth, based on the average figures over the last twelve months, growth has only been maintained Malvern whilst both Worcester and Droitwich have levelled off.
HMRC estimated 46,230 sales in May, 25% higher than April. With plenty of pre-lockdown sales still to complete and Dataloft Demand Index reporting a huge surge of consumer interest in the housing market, the total could rise by 60% in June.
9,250 sales exchanged per week in April when the UK was in lockdown. Assuming the same rate in the first three weeks of May (professionals not fully active in 3rd week), 18,480 sales would have exchanged in 4th week of May.
We estimate 74,000 sales will exchange in June, the same weekly level as 4th week of May. In July we expect a greater increase, as the market picks up in Scotland and Wales, following opening end of June.
The economy contracted by 10.4% in the three months to April and in April alone shrank by 20.4% (ONS). Bank of England announced interest rates will remain at 0.1%.
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.
Average rental values across the UK rose by 1.5% in the year to May 2020 (IPHRP). The RICS Survey reports an improvement in tenant demand, however, landlord instructions have continued to decline, the trend that long predated the impact of Covid-19.
Following the property market re-opening in England, Rightmove report the highest number of rental enquiries in one day since September 2019.
Dataloft Rental Market Analytics allows us to understand the movement of tenants. Pre-pandemic a quarter of tenants moved less than 1 mile and 5% moved from overseas, will the patterns change?
Post-pandemic we may see a shift in renters’ movement; 58% of agents believe properties in urban areas will be less enticing and 74% believe there will be a shift in demand for properties close to green space (Source: Dataloft Rental Market Analytics, Royal Institution of Chartered Surveyors).