Welcome to the May 2021 Property Market Comment. The cherry blossom is always a reminder of the very peak of spring, and indeed of the annual boost to the property market. Certainly, this year has seen more intense activity than most of us in the property sector can remember.
However, when we speak about the property market, booms, etc, it’s important to remember that there are two elements to consider. On the one hand, you have price movements, and on the other, transaction volumes. In other words, what prices are being achieved, and how frequently? It is the balance between these two that powers the market.
This year, we say the market is strong – and indeed it is, meaning that we’re regularly achieving impressive prices. If something comes to market, we are usually able to find a buyer who’ll pay asking price (and sometimes above asking price) within a few days or weeks. Sometimes, we’re even able to sell properties to pre-qualified buyers before the property is listed on a portal, and many deals are going to sealed bids.
2021 is a year like no other. Although the economy shrank by 1.5% in the first quarter of the year, it grew by 2.1% in the last month of that quarter. Certainly, the property sector is now rapidly moving from cautious optimism to outright confidence. The combination of the release of pent-up demand following years of Brexit confusion, and then a year of lockdown, along with the Stamp Duty concession and a surprisingly positive economic outlook all point to one thing – a substantial increase in demand for property, prompting ever-higher prices (so far over 6% this year according to the Nationwide).
But where do these buyers come from? You might expect that, apart from first time buyers, who make up approximately 50% of the market, mostly at the lower end, anyone looking to buy would also be expecting to sell, and the market should be therefore “in balance”. The problem is, because so many properties are selling invisibly (in other words they never even made it to a portal) people’s perception is that there is nothing available to buy. So whilst they themselves keep looking, they don’t put their own on the market because they are worried they would sell before having found somewhere else to buy. Chicken and egg. This is one of the reasons why there are reports of there being 16 buyers chasing every property. No wonder prices are rising. But the market only has itself to blame for this.
And – if you are trading up in a rising market, it’s even more important that you act quickly. This is because if your £300,000 sale increases in value by say 10%, and your £500,000 purchase has also increased by 10%, then you’d have a £20,000 shortfall.
So we say, have a little confidence. If you are looking to move, do put your own property on the market as soon as you can. This will not only give you time to get the legal ball rolling with your conveyancing but, in a highly competitive market, you’ll be regarded as a red-hot buyer by estate agents, putting you in pole position to be offered those off-market properties first! There’s probably been no better time to take advantage of the current market than right now!