Worcester, Droitwich & Malvern Market Update – June 2020
COMMENT
Dataloft Homemover survey revealed that just under half of buyers’ home requirements have changed as a direct result of lockdown. A garden has become a much more important consideration for them, a less urban area and being closer to family and friends has also increased. The importance of space to work from home and broadband speed has increased, reflecting buyers’ expectations to work from home more often following Covid -19.
Time to reflect and value the things we took for granted could be one of the few positives to come out of the lockdown experience. We are now a couple of weeks into what some are calling ‘the difficult bit in the middle’ before we can say that we have made it to the new normal. The resilience in Worcestershire’s housing market is reflected in the 24 transactions we completed during the lockdown and the response since the restrictions were relaxed.
It is already clear to us that virtual viewings will become part of the new normal, when it comes to house hunting; and the interest generated by our new Gavl Livestream service has been phenomenal. You can click on this link to find out more: Why we’re using Gavl.
To attend a Livestream viewing simply download the Gavl app on your mobile device and click on the property that interests you.
LOCAL MARKET ROUNDUP
Over the last 12 months, there have been 4,793 sales across the WR postcode area, 11% less than the previous year. In Malvern, where Nicol & Co are soon to open their third office, activity was only 10% lower with 640 sales. Whilst in Droitwich, 608 sales is only 9% down, despite the recent months of uncertainty.
The Lettings picture is similar with the average rent achieved in Worcester lowest at £589, with Malvern 18% higher at £695, 7.3% above the WR postcode area average of £647. Droitwich Spa remains highest at £761, 17.6 % above the postcode area average. After a long period of steady increases, based on the average figures over the last twelve months, growth has only been maintained Malvern with both Worcester and Droitwich slipping back this month.
Source: Dataloft Market Rental Analysis (rental data is based on achieved rents for approximately 10-15% market share, depending on location).
NATIONAL MARKET
There has been no mass exodus of properties from the market following Covid-19 lockdown. Rightmove report that available stock for sale is only down 2.6% since lockdown. This tallies with the recent Dataloft survey where 81% of agents reported the majority of vendors were keeping their properties on the market.
When the residential market reopened on 13th May in England and Rightmove had 5.2 million visits on 13th May, up 4% on last year with the figure climbing to 6 million on Wednesday 27th May making this their busiest day ever. According to Hometrack buyer demand spiked by 88%, exceeding pre-lockdown levels in the week to 19th May. However, they suspect this demand is temporary and it will moderate in the coming weeks.
LETTINGS MARKET
Average rental values across the UK rose by 1.5% in the year to April (IPHRP), the highest annual growth currently is in the South West, 2.6% and the lowest growth was in the North East and Scotland, 0.7%.
However, RICS Residential Survey reports Coronavirus having a negative impact on near term rental growth, with rents stagnating over the next 12 months. Fortunately, the five year forecast remains positive with an average annual growth of 2.5%.
Following the property market re-opening in England, Rightmove report the highest number of rental enquiries in one day since September 2019.
ECONOMY
The economy contracted by 2% in the three months to march, following zero growth in the final quarter of 2019 (ONS). Bank of England announced interest rates will remain at 0.1%.
Their scenario based on lockdown relaxing in June expects the economy to contract by 14% in 2020, rebounding in 2021 to 15%, back to pre Covid-19 levels by mid 2021. The latest HM Treasury consensus forecasts for GDP growth are -5.8% for 2020 and 5% for 2021.
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 is expected to fall to zero at the start of next year and remain below the 2% target for the next 2 years.
DO YOU HAVE RENT PROTECTION COVER?
Working alongside The Lettings Hub Ltd, an Appointed Representative of Let Insurance Services Ltd we are able to provide Rent Guarantee and Legal Protection cover to our Landlords. With the prospect of increased threats from an extended Government lockdown and further legislation changes due to the COVID-19 virus, Nicol & Co felt it was advisable to protect our Landlord’s rental income, as much as is possible.
There are a limited number of Companies offering rent and legal guarantee insurance due to the Governments reforms on rental payment holidays, evictions and the Section 21 notice. Landlords need to be aware of what impact these reforms will have on their existing policies and what action they need to take to ensure the validity of the policy going forward. If you have any queries on this, or any other tenancy issue you may be experiencing, please call 01905 675999.