How does the local property market look for the next 6-12 months?

By Aiden Johnson-Hugill, Director at Grenadier and Louise Glanville, Associate at Knight Frank Exeter

On the 23rd March the UK was put into lockdown by government in an unprecedented move to save lives and to protect the NHS. It is no surprise that the lockdown and the resultant economic impacts is causing much uncertainty around employment, healthcare and now more than ever mental health. It also affects our friends, our families, the education of our children, and of course, the future of our country. The rather sudden change of circumstances households and businesses have undergone to comply with lockdown rules will no doubt continue to evolve, and our industry is just one of many considering how it will affect them over the next 6-12 months.

In mid-May the Property industry was given the go-ahead to reopen in England following a Government announcement that property viewings and home moves can go ahead, under strict health and safety guidelines. The latest news suggests a property boom as city dwellers make the move to the countryside as they reassess city living.

Key considerations for buyers and sellers

According to Rightmove*, the priorities of buyers have somewhat changed since lockdown. The kitchen is no longer the selling point, but instead the garden, additional space for homeworking and living within close proximity to green space are all top of the list for potential house buyers. Flats in city have always been a sought-after investment but now it seems demand is surging for homes with garden spaces and for those near the coast.

Louise Glanville, Associate at Knight Frank [says]: “We’ve already seen a great demand from those currently residing in cities like London, for our properties in Devon. People are re-evaluating their needs and we have seen gardens and green spaces now becoming a high priority for homebuyers and renters. The number of offers outside London at the beginning of June were the highest on record, which just goes to show how the recent situation has affected the needs of house.”

House sales and rentals

The majority of housing sales agreed pre-lockdown have continued to slowly develop, with many buyers and sellers holding their nerve. According to Knight Frank only one in five transactions agreed before the lockdown fell through. During the beginning of lockdown, newly agreed sales however saw significant falls in sales mainly due to social distancing measures.

However, since the property industry has been given the go-ahead to reopen, the number of enquiries and the volume of web traffic on property sites has increased by a staggering 71%** at Knight Frank as people try to look to the future and life after lockdown.

Louise comments: “We’ve seen an increase in the number of buyers looking to sell their property in the city and move further out into the countryside in recent weeks. The enquiries we have received suggest the lockdown has pushed homeowners to make the transition from city-living to countryside homes. We secured property buyers only days after it was announced estate agents could reopen.”

Knight Frank in Exeter re-opened their offices on the 18th May. The team put procedures into place to account for social distancing within the office environment. With regards to viewings and marketing they are primarily using virtual tours. Any serious prospective buyers may attend an on-site viewing, but the seller will not be in attendance during the viewing and everyone is be provided with Person Protective Equipment (PPE) including masks, sanitisers and alcohol wipes via Knight Frank. The agency will also hold specific viewing days for each property so that the seller will only have to prepare the house for certain days. Viewers are not permitted to open doors or touch furniture and the house will be prepared by the seller before the viewing, this will include leaving doors open etc.

Louise continues: “The safety of our staff, sellers and prospective buyers are of upmost importance for us. We will accommodate potential buyers and sellers and those looking to rent using online meetings and virtual tours in the first instance and only those committed to moving forward will currently be able to attend a property in person, but under strict guideline in line with government advice.”

Site visits will also be available to prospective buyers, but the same health and safety measures will be in place. Site and house visits will likely be limited to 20 minutes and open houses are not expected to be reintroduced for some time.

House prices

With so many mixed messages it is unclear how the residential property market will be immediately impacted and how this may change over the next 12 months. A major factor will of course be employment retention in the UK, but according to the agents there is still a demand for properties and many sales are still going ahead, it is just the needs of buyers that have shifted.

According to Liam Bailey, global head of research at Knight Frank, in March, on average homes were sold for 98 per cent of their asking price***. In comparison, sellers are excepting lower asking prices and pricing discussions are expected to continue until there is a clearer agenda around Covid-19. Shaun Hobbs, head of Knight Frank’s Basingstoke office said, “I had two offers in lockdown and advised the vendors to hold their nerve,” despite people worrying about how Covid-19 would affect house prices sales seem to be picking up again. “That really paid off with better prices in the end,” he said.

In 2020, Knight Frank achieved a record sales price of ￡2,5000,000 on a property in Exeter, and Louise believes the South West will be relatively shielded by the downturn as demand is still healthy/strong in the area. “Lifestyle and location will become more of a deciding factor in people’s choice. Buyers are looking for properties that are close to travel amenities yet are environmentally friendly, with green, clean outdoors spaces.”

Aiden Johnson-Hugill, Director at Grenadier, adds: “The way people think about the environment and preserving the planet has evolved over the last couple of years, so much so it’s finally front-page news more often than not and is getting the attention it deserves. We may find that Covid-19 jolts us forward even further as people weigh up living in the city with limited space or relocating for greener pastures.”

“The South West is in a good position as the number of enquiries for sustainable properties in the region are on the rise and building greener communities with wildlife-friendly gardens, community parks and home offices instead of long commutes can only ever be a good thing for the environment.”

What is next for the region?

Louise says: “The overall outlook for the UK is a 7% drop in house prices. At Knight Frank we are not expecting much of a decline if any at all in Exeter. I would anticipate an initial plateau on residential homes but expect a marginal increase towards the end of the year due to overall demand.”

“We have seen 113% increase in offers accepted in the South West, versus the five-year average, and a 31% increase in new applicants searching for a home***. We are expecting a swift recovery to take place in 2021 and we will see a sharp increase thereafter. Right now, people have simply changed their priorities but in terms on enquiries we’re rushed off our feet.”

Aiden adds: “Property reflects people’s hopes and dreams coupled with the practicalities of day to day living. As we all seek space and security, I strongly believe Exeter and the wider area will see an increase in market appeal and more buyers looking to relocate to a greener environment.”

“We are also seeing buyers place sustainability far higher on their property requirements and Grenadier is just one of the developers in the area building cutting-edge EPC A rated homes with low impact living. I am confident prices will remain stable in the short term and we can look forward to increased demand across the region.”

References:

*BBC, https://www.bbc.co.uk/news/business-52922313

**Data from Knight Frank’s Residential Research Team

***https://www.knightfrank.co.uk/research/article/2020-06-15-record-levels-of-offers-accepted-a-month-after-lockdown-lifted

****Data from Knight Frank