The local property market in the post Covid 19 era
Novel Coronavirus (COVID-19) - Uncertain circumstances for the local property market
We have been monitoring the twists and turns in the property market over the period, from the full lockdown, to increasing precaution’s, partial lockdown, Tier 3 arrangement, return to lockdown 2 and the bubble of demand fuelling a period of static to stable house prices.
Everyone is naturally cautious at this time and the unprecedented circumstances do make the property market ‘turbulent’ and its difficult to predict forward by more than a couple of months, at the most !
We are including comments in our reports such as :
“This postcode is in a built up high density / urban area and the R rate is reported to be higher in such locations, there is still a paucity of comparable evidence since August 2020. In Merseyside, enhanced Tier 3 Covid 19 precautions have been in place. The effects of enhanced precautions are as yet uncertain.”
During the early Covid 19 developmental period from January 2020, the RICS issued guidance, declaring “materiel uncertainty” due to lack of sales evidence and perceived market volatility, the wording was :
“The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries.
Market activity is being impacted in many sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement.
Our valuation is therefore reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS Red Book Global. Consequently, less certainty – and a higher degree of caution – should be attached to our valuation than would normally be the case. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation under frequent review.”
As the spring lockdown was ended and the housing market started to return to at least some level of activity, the RICS changed its guidance wef 12/08/20 :
“The RICS Material Valuation Uncertainty Leaders Forum (UK) are advising that from mid August (2020), reporting material valuation uncertainty may no longer be appropriate for all residential property in England”
We added :
“extended precautionary arrangements are in place in Merseyside, it is not known yet what if any effect this will have on the market.”
"After the spring lockdown ended and the market re opened in say July 2020, we saw a period of sales settling at or near asking price, as vendors and estate agents struggled to find the exact level of value, many asking prices are on an “offers over” basis, basically seeking bids on value, as estate agents are ‘testing the water’ but against a background of reduced volumes of property for sale".
By way of the information we are watching, a quote drawn from the Nationwide Building Society Property Price index for August 2020 sums up the state of the market towards the middle of the year.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.
However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”
Economic actions have not quite followed those predictions in September, but the market remains pensive and hesitant.
For the biggest financial decision you make, with regards to a property, good local professional advice is vital in these uncertain times
We are advising clients, that in volatile / uncertain markets, valuers are nervous about properties that sell at the asking price, but often, as the property has been on the market for so little time, the asking price will be anticipated by the vendor as the acceptable / assumed value. Non the less, people usually ‘ask more than they expect’ this is the nature of asking prices, we ask clients to see if the vendors will negotiate on price and try to obtain a lower value if possible.
We have added comments such as :
“Considering the market ‘right now’ the agreed price is within an acceptable range of value, but consider if this can be sustained if economic conditions harden in the next few months with rising R rates and local lockdown conditions.
In the medium term, with emerging developments, the ‘true’ and sustainable value will depend upon the emerging market evidence and a suggested figure can only be considered as an estimate at this time. THIS IS A RISKY MARKET AT THIS TIME.
Consider postponing the negotiations on price until the market has settled down or there is more general clarity.
Consider, if you have a low appetite for price / risk, walking away from the negotiations at this uncertain time. The property may remain on the market and it may be possible to pick things up in some months, when things may be less uncertain”.
"Currently, following the spring 2020 Lockdown, the market is reasonably active particularly for properties with outside space such as to this property, and we believe this is pushing up the prices. However, we cannot guarantee that these levels of values will be sustained in the medium to long term, particularly if, as many predict, there will be an economic downturn".
We provide a professional service with our eyes constantly on the emerging property market here in Merseyside and the wider areas beyond, we are conscious that people have differing levels of appetite for risk and we can advise you on a one off basis as things are developing around us.
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