Thoughts on the gravity-defying property market.
Thank you Howard Davis for writing this article. Howard is Managing Directory of Howard Independent East Agents.
What Isaac Newton, who formulated the laws of gravity in the middle of the 17th century, would have made of the current gravity-defying property market is anyone’s guess. But no doubt, like most people, he would have been flummoxed.
Even a genius like Newton, who worked from home during the plague of 1665-66, might have had difficulty making any sense of this mad market.
Despite a global killer pandemic, millions of people out of work, the nation in lockdown, pubs shut, travel halted and the Treasury handing out billions in support of businesses, jobs and mortgages, the property market boomed – and it continues to do so. It should, by any calculation, have plummeted like an apple from a tree. Instead, the market didn’t fall; it held itself in suspended animation for a while before surging upwards.
By any estimation the market should at least have mirrored the slowdown experienced after the great recession of 2008.
Yet prices are rising.
But perhaps we can learn something from Newton, whose third law stated that to every action there is an equal and opposite reaction.
Homeowners, homebuyers and renters reacted to Covid by moving from large urban centres to bigger properties in less crowded areas where they could work from home at least a few days a week. At the same time historically low interest rates kept mortgage repayments manageable, and the amazing vaccine programme has generated confidence.
Low levels of housing stock
It wasn’t long ago that property professionals were preparing for the worst. Now the sales market, which is experiencing very low levels of stock, is seeing increasing values with selling prices in some areas often exceeding their asking prices.
In the rental sector, demand for accommodation was the highest on record in April and showed no signs of slowing through May and into June. According to Propertymark’s most recent report, agents had experienced an 'increased number of landlords' raising their rent in the last few months. When it comes to rental stock - a slightly different story from the sales market, with supply only marginally less than expected for this time of year.
As we move into summer, will we continue to experience growing numbers of sight-unseen sales, ultra-competitive bidding through all price ranges and the ugly re-emergence of gazumping? All the sure signs of people who are panic buying and a crazy property market in boom mode, the like of which we haven’t seen since the 1980s. Whatever happens, the Howard team are here to help clients make sense of it all.
Let’s give Newton the last word in trying to make sense of what is going on. He said,
