I tend to take anecdotal evidence with a pinch of salt, but someone remarked to me recently that they’d seen a noticeable increase in estate agent signs going up in their local area, certainly since the start of 2020. And these weren’t just ‘For Sale’ signs but those boldly proclaiming ‘Sold’ across them.
Now, while I had to agree with that individual, I’ve also worked in this market for long enough to rely on the actual facts and figures, to look at our own data to get the market trends, rather than simply taking a drive around the residential streets of where I live in order to come to a conclusion.
It’s also why, when it comes to house prices, there tends to be some scepticism around asking price data as opposed to actual completed sales and the prices which were actually paid. I’ve written before about the discrepancy between asking prices determined by estate agents, and indeed homeowners, and how they can differ markedly from the valuations we, for example, come to.
In that regard, how do we view the asking price data released by Rightmove each month, the latest iteration of which is remarkably bullish, especially when compared to some more recent versions of the data? This month’s Index suggests that asking prices have gone up by £2.5k since January, to an average asking price of close to £310k – indeed, it’s just £40 shy of being an ‘all-time record’.
It also says that ‘agreed sales’ were up by 12% year-on-year, although again how many of those ‘agreed sales’ might actually complete is still up for debate. Just because an offer has been accepted, does not mean that the sale will go ahead, and neither does it say what the actual agreed price might have been, or how it compares to the asking price.
So, while I think there’s little doubt that the housing market has seen something of a ‘bounce’ since the start of the year – indeed, probably before that – I’m also conscious that asking prices do not translate into sales, and neither should we look at the Rightmove data and posit that these are going to naturally translate into Land Registry sales.
There are, however, some fundamentals within the UK economy that should give us a reason to be positive about the market, and this is without knowing what might be announced in the Budget, especially in terms of stamp duty reform.
I recently attended the Stonebridge Conference, and heard from the economics editor of The Sunday Times, David Smith, who talked about how fundamentals such as very strong employment figures, coupled with real wages on the increase again, was probably translating into more confident households, and it was this confidence that would translate into a more active housing/mortgage market.
We are, of course, in the very early days of this and – as mentioned – it will be interesting to see how the Budget fuels (or impacts) this but David called these factors a “potent combination” for households who while they tend to be gloomy about the overall economy were actually very positive about their own financial situation.
And so here is why we might all be seeing more estate agent signs going up in our neighbourhoods, and why those asking and house price figures appear to be going in an upwards trajectory.
Will the Budget boost this even further? It looks likely because, even with the new Chancellor, the direction of travel appears to be going to one destination and that is changes to stamp duty, potentially with significant cuts to those purchasing homes valued up to £500k and perhaps an incentive for those downsizing. We might even see a cut to the extra charge for additional property owners which is likely to give a considerable boost to the purchase market, with landlords seizing upon this as a catalyst to add to portfolios.
While we await March 11th – or indeed, a changed date given the new Chancellor – it does seem likely that 2020 might well be a rather different year for the housing market than those we have seen in recent times. They have been very similar, but if we do now have a government that wants to be radical and wants to significantly increase housing activity, then it is surely now that we’ll see the measures put in place to do this?
As always, it will be up to us to be realistic about what this means, and to ensure that homeowners, and others, do not get carried away with the value they put upon their home. Realistic valuations in such a marketplace will add to the number of transactions that take place, and lenders should seek experienced surveyors who have the technology to work quickly and accurately, especially during busy periods.
I’m sure we would all be pleased to see a period of increased activity over the long-term and the greater level of work this will bring to all stakeholders.
Simon Jackson is managing director at SDL Surveying