There’s more confirmation this morning that the housing market is enjoying a short-term bounce – and that’s before the effect of yesterday’s stamp duty initiatives.
The latest market snapshot from the Royal Institution of Chartered Surveyors, out today, shows a net balance of 61 per cent of its monthly survey respondents seeing a rise in new buyer enquiries over the past four weeks.
The number of new properties being listed for sale also rose over the month, with a net balance of 42 per cent of survey participants noting an increase rather than decrease.
As agents continue to deal with a backlog of sales held up by lockdown, the number of newly agreed sales moved into positive territory for the first time since February, with a net balance of 43 per cent citing an increase in completed transactions.
However, the average number of properties on agents’ books remain close to all-time lows – just 39 on average per branch, says RICS. And on prices, for the third successive report respondents have reported a decline in house prices.
“Key activity indicators in the RICS survey suggest that the market is enjoying a short term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions” explains Simon Rubinsohn, RICS chief economist.
“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture. Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.
“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”
As you may well be aware, the Chancellor has just raised the threshold for Stamp duty to £500,000 until the 31st March 2021. Whilst this is better than nothing, there is an urgent need for far more drastic measures.
Over the last 2/3 decades, we have seen the property ladder literally pulled up from the reach of the younger generation and that reaches far beyond stamp duty. In the first instance, there is a desperate need for a government backed scheme for ALL 1st time buyers who are in need, to ensure that they have a 95% mortgage available to them, if not more.
We all peddle the notion about property creating wealth, but I would urge you to consider that this generation’s equity, is the next generation’s debt and there comes a time for humility and less economic arrogance, because over the next decade or so, there will be a sharp decline in buyers in the 30s & 40s coming through and that will be catastrophic economically, politically and socially.
There is also the matter of the disgraceful disparity between the base rate and the standard variable rate. Anyone who has had any financial upset during the recent crisis, who’s mortgage deal is coming to an end will struggle to get another, because the best deals Cherry Pick borrowers, this is about people’s homes, not luxury goods.
The difference between the Base rate and the standard variable rate used to be as little as 0.5% no it is around 5% This means that those in the most fortunate position can get deals at less than 2% yet those who may not have a steady income or have even had a late payment cannot.
The market may be crawling along, but unless something major is done, the stagnation will continue and when the stamp duty holiday ends it will cause a rush of completions followed by a slump, just as the end of double tax relief did in 1988. It should have been tapered out over months, not cut off overnight.
Agents have spoken out angrily against any uncertainty in the market caused by government leaks about future stamp duty changes.
In recent days many national newspapers have reported that Chancellor Rishi Sunak will tomorrow reveal the principles of a stamp duty change – either a six month holiday, or selected short-term changes at the mid and lower end of the market.
But most of the government leaks say this change will merely be discussed in Sunak’s announcement tomorrow, but not actually introduced until the Budget in the autumn.
This has led to widespread concern that the uncertainty will damage the market’s recovery over the summer as buyers wait to see if they have to pay less duty – or none at all – later.
“Please either announce that you are changing it one way or another. Please don’t say you are thinking about it or it may be introduced in a few months. Otherwise, you will stop the market in its tracks as buyers and sellers wait to see what will happen before making decisions and you will kill off any or much of the growing increase in activity we have seen since lockdown restrictions were eased” explains Jeremy Leaf, former chair of the residential faculty off the RICS and the owner of his own London estate agency.
Stacks Property Search, a buying agency, tweeted yesterday: “More uncertainty and a brake on the market as buyers wait for the autumn?”
And a statement from Tom Bill – head of UK residential research at Knight Frank – said: “The government understands that moving house has far-reaching benefits for the UK economy and this may form part of a wider re-think of property taxation that recognises this strategically important role. However, it would need to be introduced immediately to prevent buyers from putting plans on hold and losing the momentum that has built since the market re-opened.”
Other industry figures are concerned that the suggested changes – which, if they come to pass, would apply almost wholly at the middle and lower end of the market – do not go far enough.
Tomer Aboody, director of property lender MT Finance, says: “The [stamp duty] threshold for higher-end properties – £1m plus – is still at extraordinarily high levels, which prevent many from selling or buying. While giving a stamp duty holiday at entry level, why not also reduce the higher-end stamp duty to previous levels where it was a set amount? This would allow, even for a short period, for the market to evolve, and for buyers to move up and down the ladder more easily.”
Aboody also calls for downsizers to have a stamp duty perk to encourage greater mobility in the market.
Last summer Johnson himself said during his Tory leadership campaign that he would consider raising the stamp duty threshold from £125,000 to £500,000 and cutting the top SDLT rate from 12 to seven per cent.
At around the same time the new Chancellor, Sajid Javid, made clear in media interviews that he too wanted a reform of the tax – although his initial suggestion that the burden could be shifted from buyer to seller was later denied.
By the time of December’s General Election the only firm commitment regarding stamp duty in the Conservative manifesto was to create a three per cent stamp duty surcharge on non-UK resident buyers.
One of the possible stamp duty options floated by Chancellor Rishi Sunak could mean 89 per cent of sales would be duty-free.
“Temporarily removing stamp duty for homes up to £500,000 for six months will cost the Treasury £1.3 billion” says the portal’s director of research and insight, Richard Donnell.
A six month stamp duty holiday and various changes to thresholds have been floated by the Treasury in recent days; several spoke of a half year period with no duty applied to homes prices £500,00 or below.
“The greatest benefit will be found in markets across southern England where there are more homes with average prices closer to £500,000” he explains.
The greatest beneficiaries of all would be what Zoopla regards as the affordable areas in and around London where up to 95 per cent of sales would be stamp duty free.
Donnell says Stamp duty holidays are a tried and trusted way to support housing market activity and provide an additional incentive to move home at times when the economy has been hit.
“The government would hope that the savings feeds into additional spending in the real economy with more cash spent on home improvements and white goods rather than enabling buyers to spend that bit more on their next home.”
OnTheMarket says almost 500 branches have signed up in recent months, entitling their business owners to ‘welcome shares’.
Of those branches signing up to the new listing agreements, more than 60 per cent are currently contracted to list exclusively with OnTheMarket or on a one-other-portal basis of either Rightmove or Zoopla/Primelocation.
Launched on April 27, the contracts issue either £1,000 of shares per office with flexible portal choices, or £2,500 of shares per office if an agent commits to list exclusively with OTM for a minimum of 12 months.
OTM says that under both contracts, listing is free until 1 September 2020 and agents receive additional shares that equate to a percentage of the amount they pay until August 31 2022.
This is 50 per cent for periods of listing exclusively with OnTheMarket, 30 per cent for periods of listing on only one of Rightmove or Zoopla/Primelocation and 20 per cent for periods of listing on both Rightmove and Zoopla/Primelocation.
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Agents also receive discounts on their listing fees depending on whether they list on Rightmove and/or Zoopla/Primelocation as well as OnTheMarket.
OnTheMarket says it’s set a new personal record for leads it delivered to advertisers in June – over 1.8m with an average of 134 leads per advertiser in the month.
“This latest group are joining the thousands of existing estate and letting agents who are collectively the portal’s largest shareholder. The record month for leads, achieved despite a substantial reduction in advertising since the beginning of the COVID-19 lockdown, highlights the increasing value we are delivering to agents for their listing fees” says active chief executive Clive Beattie.
The estate agency group spearheading the Say No To Rightmove campaign has signed its 36 branches up to new portal Homesearch.
The Acorn Group is ”a fully subscribed and paying” customer according to a statement from the portal, which launched to the industry yesterday ahead of a launch to consumers on July 15.
Acorn chief executive Rob Sargent – whose agency remains on Rightmove, at least at the moment – says: “We’re impressed with what the team at Homesearch have done and are continuing to build. It isn’t just a portal, that’s obvious; there’s a lot more for an agent to gain than just another place to list your instructions.
“We know it will take time for them to build up public traction, but I think they’ve anticipated what UK agents need to not only market their clients homes but also at the same time assist their member agents in stimulating new business.
Homesearch chief executive Giles Ellwood responds: “We are thrilled and grateful to Rob and the whole Acorn team for believing so strongly in what we’re aiming to achieve.
“Everything we are doing is about justifying and repaying Acorn and so many other agents’ faith in our long term vision.”
A new estate agency Code of Practice is to be written by a group set up by the Royal Institution of Chartered Surveyors and The Property Ombudsman.
It will be led by a Labour peer and should produce the code by the end of this year.
The steering group – which also includes representatives from ARLA and NAEA Propertymark, Trading Standards and sales and lettings industry trade bodies – is charged with developing what RICS and TPO call “an overarching code of conduct for residential property agents”.
It will be independent under the chair, Baroness Dianne Hayter, and is the first attempt to enact one of the many recommendations put forward a year ago by the Regulation of Property Agents Working Group.
That group called for an independent regulator, licensing for all agents, a new code of conduct, mandatory qualifications and a new form of redress more powerful than existing operators: until now, none of these recommendations had been acted on, and even this morning’s new announcement addresses only one of the proposals.
The new Code of Practice is likely to be a single, high-level set of principles to be applied to all residential property agents; there will also be a number of other more detailed sections developed that are specific to various aspects of the residential property agent sector, such as sales, lettings and management.
A statement from RICS and TPO says the code is being prepared so that it can be “handed over” to the new regulator once that role is established.
The Code of Practice Steering Group will consist of consumer and sector representatives who “will work collaboratively and in the public interest, and those participating in the group do so voluntarily, in good faith.”
No names or organisations have been named so far as being involved.
A draft on the new code will go out for consultation this month, July, when according to the TPO and RICS “feedback from users, professionals, buyers, sellers, lenders, tenants and landlords will be sought.”
Baroness Hayter is a Labour peer whose CV includes being Chair of the Legal Services Consumer Panel, Vice Chair of the Financial Services Consumer Panel and a member of the National Consumer Council. She also chaired the Property Standards Board.
“The forthcoming combined code will ensure that consumers are clear what standards they should expect from property professionals, and it will enable them to be confident that all residential property agents will be held to account in meeting them” she says.
“The independent Steering Group is undertaking this work to prepare an over-arching Code of Practice for the new regulator, very much within the public interest. With both consumer representatives and cross-sector support and commitment to achieving this goal of a combined code, as proposed in the Regulation of Property Agents Report, it will raise standards and trust in the industry” she continues
The launch statement of the new body includes a quote from Housing Minister Chris Pincher who says: “Baroness Hayter’s appointment is an important development for property agents as they further raise standards in their industry and protect their customers. I look forward to continuing to work with all to ensure customers are treated fairly and that all agents work to the same high standards.”
Homesearch, the long-awaited new free-to-list portal, launches today with a string of testimonials from supportive estate agents.
The new portal announced at the end of last week that it had secured over 10,000 agents signing up, although it has made it clear that not all of their listings will be visible from day one – today.
Agents are encouraged to visit the site from today, ahead of a consumer launch on July 15.
A blog from founders Sam Hunter and Giles Ellwood says: “Until our consumer launch, as an agent, you will have this upcoming two-week period to familiarise yourself with our public site and how it all works before you begin inviting your contacts to connect with you and explore the site.
“One of our main aims always has and always will be to provide agents with the best possible tools to enhance their daily activities. With this in mind, we’re looking forward to receiving your feedback once you have the chance to use our public site so we can continue to make sure the platform offers you as much as possible.”
So far no details have been revealed as to Homesearch’s marketing – a critical element to get “eyes” on a portal and produce leads to agents – but the company has now appointed an in-house PR and is expected to step up its consumer-facing activities in the near future.
Amongst the testimonials from agents who have signed up, Peter Ledger – director or Newton Fallowell in Oakham – says: “Homesearch has the potential to change the general day to day of Estate Agency for the better and we are excited to be part of this movement. The simplicity of design and ease of use is honestly fantastic, the ease of use on Homesearch Pro gives a flavour of how the public platform will work.”
David Thomas – director of Liberty Gate in Nottingham – comments: “The engagement Homesearch has with the industry is incredible. They haven’t just assisted agents to improve their service and understand their data, but they have also taken a huge amount of time to listen.”
Buyer demand for new-build property has bounced back 66 per cent in the six weeks since the resumption of the housing market according to research from Zoopla.
The portal says this recovery is a continuation of the upsurge in demand recorded at the start of 2020 – following the December General Election – when the property market recorded its strongest start to a new year since 2016.
While resale properties have also registered a significant recovery in demand, the rebound is currently tracking at 46 per cent in the week to June 21.
The recovery in demand for new homes follows a less significant fall in demand, compared to resale properties, in the immediate aftermath of the COVID lockdown and subsequent market suspension.
In the week to April 5, demand for new homes had fallen by 53 per cent compared to a 71 per cent drop in demand for resale properties.
Perhaps unsurprisingly, first time buyers – often regarded as the engine of the sales market, thanks to Help To Buy and other incentives – are driving forward a significant proportion of demand for new homes.
While first time buyer demand for new homes fell 68 per cent between March 8 and April 5, it has since recovered 87 per cent in the period to June 21.
Zoopla cautions that as some lenders withdraw higher loan-to-value mortgage products, it’s likely that more first time buyers will look to the support schemes exclusive to the new build sector to help bridge the deposit gap and take their first step onto the property ladder.
“Despite the pressures exerted by lockdown and social distancing, many new homes developers are accustomed to using technology in their day to day operation, harnessing CGIs and virtual viewings to immerse their home buyers into their product. This enabled many to continue selling – albeit, remotely” explains Alex Rose, director of New Homes.
And he adds: “We expect this initial spike in demand to settle as the summer progresses, but also for that demand to convert into sales agreed. First time buyers will no doubt uphold a level of demand, with many keen to make the most of Help to Buy, following the withdrawal of many 90 per cent loan-to-value mortgage products.”
In the latest of a recent flurry of consumer-facing research exercises by Rightmove, a league table of the most popular seaside towns has been drawn up – and entries are not all in the traditional tourist spots of the south west.
Looking at the levels of enquiries for the property stock available for sale in the town, Whitby in North Yorkshire takes the top spot with a relatively affordable average asking price of just over £210,000.
Next up is Whitley Bay in the North East, which has asking prices of just over £260,000 and has had significant regeneration in recent years.
Then, perhaps more predictably, there are three Cornish locations – Padstow, Newquay and Bude – followed by Salcombe and Ilfracombe in Devon. In Scotland, Ayr and Troon, the home to Royal Troon Golf Club, also make the list, along with Caister-on-sea in Norfolk.
“Lockdown has changed what a number of home-hunters are now looking for from their next home, and while some are looking for more space or a bigger garden, others are now contemplating a move to the seaside” according to Rightmove’s commercial director Miles Shipside.
The portal has calculated a so-called ‘demand formula for each area based on the number of enquiries about local properties, taking into account the size of each area and stock available.