Welcome to the latest weekly news insight from Track Capital.
It is that time of the month when we have the latest Hometrack report released and this time we have been waiting in anticipation to see exactly how the property market has reacted and whether it would go up or down. Overall, it is fairly positive news with buyer demand spiking, new sales agreed increasing 12% since the market reopened and 60% of would-be home movers still intending to go ahead with their property plans. UK House prices grew annually by 1.9% and Nottingham tops the table with an impressive 4.1% increase.
We will have to keep a close eye and will still be waiting dubiously for the next report to see if this trend continues. This could be a limited effect of the pent up demand created by lockdown which we have suggested before. However, as long as the market fundamentals stay strong like they currently are and the economy looks to get back on track (albeit it, at a steady pace), we would expect the property market to hold its ground. With the government easing lockdown and moving through the later stage of the government’s plan, things are heading in the right direction. Time will of course tell and we will all be wary of a second spike.
I strongly suggest clicking the link and taking a good look at the latest Hometrak report to get a feel for the market and now, without further ado, please see the property headlines that caught our attention this week:
Property news this week
- London rents drop by up to 15% amid the coronavirus crisis – According to Chestertons, private landlords in London have had to drop rents by up to 15% following a growing number of vacant properties on the market. A decrease in corporate relocations and overseas students looking for accommodation has seen a sharp fall in tenant demand in the capital. Interest is there though, with an increase of 52% more enquiries compared to last year but a 27% decrease in new tenancies being agreed as tenants are looking for the best value meaning landlords have to reduce prices to prevent long voids. When businesses had to shut down due to COVID-19, this was always a possibility of happening in London as rental affordability has always been tight with a single persons rent sitting at 46% of their income. Of course, this may be shortlived and once the economy gets moving again we could see the tide turn in the capital.
- First-time buyers could lead economic recovery if government reconsiders regulation – In a new report by the IMLA, it seems that first time buyers could be key to keep the housing market going. With many dropping off after the financial crash in 2008, a 2.7 million shortfall of young households potentially looking to buy a home was accumulated making it difficult for movers up and down the market as the first part of the property chain was just not there. The outlook is positive though as lending is still affordable, interest rates are low and lenders have an appetite to support this group buyers. Also, the Help to Buy would need to be extended or replaced by a similar incentive.
- Leicester is the best city to invest in business or property – Now don’t read into this headline too much and start running from Liverpool, Leeds & Manchester just yet. This is based on the business survival rate for Leicester being over 91%, office space price per sq ft and house prices rising 28.3% in the past two years. This does build a good case for Leicester being an area to consider as it shows a sign that the local economy should remain fairly strong after the pandemic. However, the highest average yield for Leicester is found in LE9 which is 4.9% and a far cry from Liverpool’s L1 average yield of 10 gross.
- Stamp Duty Holiday – Zoopla shows how it could help the housing market – This is a good article to check out where Zoopla have looked at how and if a stamp duty can help the housing market going forward and the effects of previous stamp duty holidays/incentives that the country has had. If we look at hyperlocal markets where a stamp duty holiday would be most effective, London and the South East definitely come out on top with these paying 72% of all duty in 2018/19.
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Team Track Capital