We have seen more areas placed into Tier 3 restrictions this week and Rishi Sunak, thankfully, revealed more COVID-19 help. We have also seen the last head-to-head debate take place between Trump and Biden before the US Presidential election on 3rd November. So all in all it has been an eventful week.
Even with the numerous restrictions that have come into play across the country, this hasn’t slowed down house prices and demand with annual house price growth in England climbing by 2.8 percent to £256,109 according to the Office for National Statistics and the Land Registry. If you had told me at the beginning of the year that we would find ourselves in the middle of a global pandemic with the UK “technically” in a recession and that house prices would still be growing then I would have probably laughed at you…very hard.
Now, let’s take a look at the property headlines that caught my attention this week, I always try to summarise the links to save you having to click through.
Property news this week
- John Lewis to become a residential landlord – One of the nations favourite retail stores, well known for their amazing Christmas adverts, now want to be known as a residential landlord. In a clever business move by John Lewis, they plan to build homes across 20 of its locations as part of plans to revive the business. The rental properties will be built above or beside Waitrose supermarkets (a subsidiary of John Lewis) and the company will also look to sell home insurance. These new ideas will be backed with £400m of investment. The company is likely to record a full-year loss but hopes to make £400m by 2025. This move by John Lewis gives an insight into how the overall property sector is set to change with commercial properties moving further into coupling up with residential property as commercial/retail space demand reduces.
- Equity available in UK homes soars to £600bn – It seems that people have a lot of money sitting in their homes which they might not know about. Analysis from Canada Life has revealed there was almost £600bn of equity available for release in UK homes in Q3 2020, an increase of £100bn from Q2. The total amount of housing equity available to homeowners aged over-55 now stands at an estimated £591bn. This further cements the view that property wealth continues to be an important source of later life funding. With long term property growth almost inevitable, it would seem that you should be investing in property sooner rather than later to benefit later on in life.
- UK property sellers ‘too optimistic’ as asking prices hit new record high – The property market is currently flying. We had an all-time high of property prices this month reaching £323,530 which is a 1.1% increase on prices last month, Rightmove traffic saw its biggest year-on-year leap in 14 years being up 49% in September and the number of sales agreed this year so far is also now 2% higher than last year. When this starts to happen, sellers get confident and think it will keep rising and start to be very bullish with their price and it can only last so long before they overprice themselves and they wonder why their property won’t sell. I used to see this all the time in strong property markets when I was an estate agent, I would go out and give them the market value and they would proceed to tell me how they want to put it on for much more because the market was flying. In the early stages of the explosive phase, this would work and they would probably get what they were asking but the novelty would wear off and buyers would start to realize what is going on, leading to them hesitating to buy so they didn’t overpay. This would create a standoff between buyers and sellers leading to a slight market correction in prices. We have recently seen this in the South East in the past year or two. This is a common occurrence in the residential resale market.
- Hargreaves Lansdown raises fresh concerns about stamp duty holiday – Not rushing to capitalize on the stamp duty holiday has been advised that I have found myself giving. It has caused a mini short-term boom (the Halifax house price index put inflation at 7.3% in the year to September, while home sales rose by 21.3% in the same month) meaning that you have to be careful not to overpay for a property. This is predominantly seen in the re-sale residential market for homeowners. My friend was nearly victim to this, he was viewing properties to buy his next family home in the South East and was up against 5-7 other bidders with the final bids going anywhere from £50k-£70k over the asking. My advice to him was to not panic buy and make sure whatever you were offering was not more than the property would be worth in a settled market. Luckily he did this and found a property for the right money. This is the thing I like about the off-plan property we sell, it is priced according to RICS valuations and comparable properties, is off-market (less eyes looking which means no over-inflated prices), and usually comes with a discount.
Get in touch with the team anytime to discuss your UK property investment plans through [email protected] or on +44(0)203 627 3987.