Ahead of national press coverage emerging in early May which we fully expect will be reporting on a “disastrous” month of figures for the “UK property market” in April which does not exist (the UK is a patchwork of local markets each with its own dynamics!), we wanted to advise the public of what is really happening in the local East Central Scotland market with all the latest up-to-date facts, statistics and analysis you have come to expect of Neilsons in recent years.
Why will reported sales and purchases be so low in April 2020?
Under current necessary lockdown guidance, which we wholeheartedly support, properties cannot be marketed, and most transactions cannot settle in Scotland unless in very exceptional circumstances.
If you market a property for sale on the open market in Scotland, a core legal requirement is a “Home Report”. This is a document that tells you everything you need to know about the property. It’s split into three parts – a single survey and valuation, a property questionnaire and an energy report and the majority of the Home Report is carried out by a chartered surveyor in person. In addition, a photographer is required to attend a property to carry out photography, any video tours and the floor plan. In most cases, these processes cannot (understandably so) safely take place right now. This has prevented a wave of properties going to market over the past month, since lockdown, and will explain why in Scotland new property figures will grind to a halt in April 2020 figures.
It is not that there are no properties due to come to market. On the contrary, Neilsons have 30 properties and counting lined up to come on the market when lockdown can be safely lifted. 10 of these properties have given us a future go ahead in the past week.
In terms of settling transactions, The Law Society of Scotland has noted “Public health must be at the forefront of all decisions during this difficult time and members should not put themselves, their staff, clients or members of the wider public at risk.”
The Government and Law Society advice, which we completely support, is that almost all home movers should delay moving to a new home while the stay at home measures are in place. Parties should seek for all settlements to be delayed and only move home when it is necessary to do so, where the move is able to be completed safely and the property is empty or can also be safely vacated.
A conveyancing settlement requires several different parties to be able to implement various legal and practical processes, which in the current circumstances are difficult to achieve. We are closely monitoring all transactions and advising clients on a case-by-case basis how best to proceed.
This of course has prevented a considerable amount of properties settling in the past month, and this explains why Scottish sale and purchase figures will show a dramatic, sharp decrease in April 2020 figures. No surprises there then, but there are perfectly logical reasons for this.
Pent Up Demand
Jenna Spence, Operations Director at Neilsons Solicitors and Estate Agents, reflects on the current local property market situation:
“We were experiencing the busiest residential property market seen in Edinburgh and the Lothians just before lockdown. Closing dates with up to 20 Offers received in some cases for popular, well presented, accurately priced and professionally marketed properties were not uncommon and there was good news for buyers too. At Neilsons we recorded a property stock increase of nearly 25% in March 2020 compared to 2019 and this was giving buyers more choice in the competitive sales market heading into spring.
The property market effectively entered ‘sleep mode’ almost overnight with the vital lockdown measures grinding to a temporary halt new to market properties and transactions except for in very exceptional circumstances.
That isn’t to say activity has frozen – there is huge pent up demand bubbling away beneath the surface. We know this, because we are at the forefront assisting local buyers and sellers right now. To suggest the property market has frozen or crashed indicates a long thawing out or recovery process which – based on our evidence – does not seem likely for the Edinburgh and Lothians market.
In a recent analysis, Edinburgh topped the list of cities most likely to recover quickly from the lockdown outside of London.
Since lockdown on 23rd March 2020 to 23rd April 2020, our property search page hits on our website increased by 24% compared to the same period in 2019 indicating that buyers are still actively house hunting.
With each week that passes whilst in lockdown, we are receiving more buyer enquiries for our properties for sale, good Offers continue to be received and Offers continue to be submitted for buyers, albeit subject to physical viewing when it is safe to do so.
This weekend, compared to the Easter weekend prior, enquiries were up by a third. Easter weekend 2020 activity on our website was also up 30% compared to Easter weekend 2019. As one of the top three firms advertising in the ESPC in terms of volume, this is encouraging data for the local market. (At times like this, I am grateful for my undergraduate training in statistics and statistical analysis!)
It seems to be a similar story with mortgage lenders in terms of increased enquiries too – Scottish Building Society are this week reporting an increase in purchase mortgage enquiries.
Lenders such as Nationwide, Halifax, Virgin and Santander have kick-started mortgage deals again which is great news for buyers.
If you are a future seller, I recommend seeking advice for the options available to you. There is a lot of the pre-market legwork that can be completed in advance remotely from home. We certainly recommend being in a position so that you can be one of the first properties to hit the open market when restrictions can be safely lifted in the future so that you benefit from the early pent up interest.
As I reflected in my Virtual Reality of the Property Market article, we have been innovating at a rapid rate and we have a whole host of new and highly effective marketing tools at our disposal for future sellers that will form part of the “new normal” for property marketing moving forward at Neilsons.
In the past month, our social media activity is up 225% and driving buyers to our website’s property detail pages so make sure you also pick an agent with a strong – and currently active – presence on all the key channels, too!
If you are thinking of buying, we recommend making a move either now with Offers submitted subject to a future in-person when safe to do so or as soon as the market re-awakens after lockdown before the demand surges again to its highest level. It is worth checking in with your mortgage advisor to ensure that the mortgage deal you may have been offered is still available and the most appropriate, and of course, our experienced Solicitors can help guide you through the process.
In either case, get in touch with us for free advice on the best way forward and we can guide you on the best way forward based on your own individual circumstances.
We believe that the pandemic impact is different to the recession of 2008, and the underlying East Central Scotland market has shown itself to be remarkably resilient. We now have the benefit of much more advanced innovation and social media stimulating the latent seller and buyer demand which could see the market bounce back very quickly. This has been the experience in China.
In my own opinion, for those wondering whether the East Central Scotland property market will re-awaken after its necessary slumber – it’s not a matter of if but when…”
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