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Daily bite-sized proptech and property news in partnership with Estate Agent Networking.
Will the 2021 property market mirror 1988?
Many property pundits and estate agents are stating that the huge fall of completions in July is just a blip and normal services will return later in the year. Many agents at the branch level are anecdotally saying that come September things will get back into the swing of things. But I am not so sure.
At present there is a shortage of property coming to the market, which many feel is a good thing as it keeps prices high; short supply stimulates demand. Although that may be wrong if not many properties are coming to the market because it means there are fewer people looking to move. If all of a sudden, vendors stop putting their properties on the market, the market stagnates.
Why the reference to 1988? Well at that time I was an agent and due to then-Chancellor Nigel Lawson announcing that mortgage interest relief at source would be paired down, but at a known future date, everyone and their dog decided to buy a property to take advantage of this fact.
In that year I personally agreed over 160 sales, such was the velocity of the market. Prices went up about 12% or more and the sales office I was part of was agreeing seven sales a week like clockwork. Then, in late August, I went on holiday for a fortnight as I had not had a day off for several weeks.
When I returned, I asked my manager how many sales we did in the fortnight I was away. He said just two. So not fourteen but two. And for the rest of the year this was the pattern. Everyone who had wanted to move had done so already, and we were left with the hatched, matched, and dispatched sales market, which stayed in the doldrums for the next four years.
Other fiscal factors also piled on. Interest rates moved from 10% (not a typo) to 12%, then up to 15% on Black Wednesday in 1992. Everyone around at the time will remember that as the day when a collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism (ERM).
At present we have a Bank of England lending rate of 0.1%, so no worries there, right? Maybe there should be, as we are still printing cash and utilising quantitative easing, which must come to an end at some point. We also have the unknown variable of Brexit returning to the mix, and a high volume of vacant skilled jobs with no one to do them. This will cause wage inflation, which could trigger mortgage rates to rise, too.
Other data to consider is that typically around 1.2 million properties complete each year in the UK. This year it will maybe be 300,000 higher. If so, next year it is likely to slump back. This year, Rishi Sunak’s genius plan of tampering with the SDLT system sped up the buying timeline. Maybe he should have first referred back to the exploits of Mr Lawson.
As you can see, and as any property professional in the loop will know, the housing market is complicated. Market sentiment is driven by many factors. When the housing market is hot and strong it’s like a runaway train, but when it cools it derails spectacularly, taking half a decade to get back on track.
Zoopla’s Yourkeys supercharges shared ownership sales journey
With my other hat on as a proptech consultant and analyst, I have always been a huge advocate of Yourkeys. As they are past clients of ours at Proptech-PR, I got to know both the tech and the team over the years, before their April 2021 exit to Zoopla.
Also, as an ex-estate agent, their mission to speed up property transactions and safeguard all stakeholders was an obvious proptech proposition to me. I could easily see how it would’ve made my life better.
The great news is that now Riccardo Iannucci-Dawson and the team are pushing forward even more under the umbrella of Zoopla, they have just rolled out a new iteration where they digitally streamline the paper-heavy process of buying shared ownership properties. These, of course, make up a good chunk of the new home market every year.
Without getting into all the technology involved, what the team has actually managed to do is codify an extremely complex set of variables and build a way to control all of these outcomes. At the same time, they’re being mindful of all the stakeholders’ needs; from the seller, buyer, lender, and legal perspective, all while acknowledging the extra needs of the shared ownership process.
In time, Yourkeys will be seen as the textbook proptech business, where a single driving proposition from the mind of Riccardo Iannucci-Dawson, coupled with the technological wizardry of CTO Dan Makin and financial expertise of Co-founder Craig Massey.
Because getting property exchanged more quickly is the holy grail of the residential agency, I would say that Zoopla has now a huge advantage in the present arms race as to which portal acquires the best proptech.
NRLA says demand is at a five-year high
Rhianna Abrey, writing for the NRLA, states: “The demand for private rented housing has reached a five year high according to new research released by the National Residential Landlords Association following the easing of COVID restrictions.
“The wide-ranging survey of private landlords across England and Wales, conducted in partnership with research consultancy BVA/BDRC, found that 39 per cent confirmed that demand for homes to rent had increased in the second quarter of 2021 – an eight per cent increase on the first quarter of the year.
“This data also reveals that demand has reached a five-year high, with demand only reaching a similar peak in the first quarter of 2016. BVA-BDRC observe that demand has increased largely due to the relaxation of COVID restrictions and a more buoyant economic outlook.
“The figures mask a trend which is seeing a two-tier rental market developing across particular regions in England and Wales. In Yorkshire and the Humber, Wales, the South West and the South East over 60 per cent of landlords said that demand for homes to rent had increased. In stark contrast, just 15 per cent of landlords in Central London said demand had increased in the second quarter of the year, compared with 53 per cent who said it had fallen.
“This supports the trend which has seen growing numbers of tenants looking to leave London in the wake of the growth in home working. Official data shows that in the year to July 2021 the capital was the only region of the country to see rents fall in real terms.
“Despite an overall increase in demand, the proportion of landlords intending to buy property has fallen from the four year high of 19 per cent recorded in the first quarter of the year, to 14 per cent. In comparison, the proportion looking to divest has returned to 20 per cent, up three percentage points from the first quarter of the year.
“As COVID restrictions are lifted, 55 per cent of landlords said that their lettings business will continue to be negatively impacted as a result of the pandemic. Again, this masks considerable regional variations. 81 per cent of those in Outer London and 78 per cent of those in Central London said they would be negatively impacted. At the other end of the spectrum, fewer than half, 49 per cent, of those in Yorkshire and the Humber said they would be negatively affected.”