Positive news on numerous coronavirus vaccines has helped to boost new enquiries to the residential property market and buck normal seasonal trends in the past few weeks in November, as buyers push to secure properties before the LBTT reduction ends in Scotland on 31st March 2020 with sellers remaining positive and buoyant, latest figures show.
From 9th November 2020 when the first successful vaccine (Pfizer) was confirmed up to and including 23rd November when the third successful vaccine (Oxford AstraZeneca) was announced, Neilsons website activity levels were up 31% on the previous two-week period at the end of October and early November. Comparing 9th November to 23rd November 2020 to the same period in 2019, Neilsons website activity levels are up a staggering 185%.
Why is this relevant?
The majority of visitors to our websites are buyers browsing properties for sale or sellers and buyers looking for advice on our services. As Neilsons are one of the top selling firms in Edinburgh and the Lothians, these figures are indicative of strong market conditions and are unusual for this time of the year, as the market normally dips in activity levels heading into December and the festive season. The property market is not immune to positive (or negative) economic conditions and encouragingly the property market has been boosted by the positive confirmation of three effective vaccines, and the suggestion by the UK Government and devolved administrations that “normal life” may be more of a reality again by summer 2021.
So, how do we at Neilsons think the market will go from here in these unprecedented times?
It’s quite complicated – there are various things that will influence the market dynamics…
- The First Home Fund has been paused by the Scottish Government until 1st April 2021. This has caused a slight cooling of demand throughout the market starting at entry level – so we are seeing some fixed prices for the first time in a long time but we are still witnessing the majority of good, well presented properties going to a closing date and high prices being offered.
- Seasonality: In previous years the market cools down as we approach the Christmas and New Year period but there is no evidence of seasonality influencing the market because of so much demand from buyers this year. Positive news of three effective vaccines in November has ensured that this month has bucked seasonal slowdown trends, as explained above.
- The current LBTT (stamp duty) reduction, was designed to stimulate the market but – as things stand – is set to finish on 31st March 2021. Our past experience leads us to the view that there is a market frenzy of activity as purchasers try to take advantage of the better rates of LBTT before they are withdrawn. This will re-awaken the market quickly in January onwards, after the Christmas and New Year break. We anticipate the portals and property websites to be busier than ever over Christmas and New Year time due to current trends, and limited socialising taking place this year which will mean more buyers will be at home browsing properties than in previous festive periods.
- The economic backdrop: Many journalists believe that the double whammy of the effects of the pandemic and Brexit will lead us to a depressed economic outlook which will impact on the property market. That may yet prove to be the case in time but we have call it as we see it and so far neither of these influences has had an adverse effect on the local property market. The Edinburgh and Lothians property market is remarkably strong and robust – as we have witnessed in 2020 so far!
Putting this all together where do we think the market will go from here?
We have now gone beyond pent up demand; many people are looking to move home as they have re-assessed their property needs, following lockdown. Despite restricted loan to value mortgages, we have witnessed activity in the market that is far greater than we have seen at any time since Neilsons was founded in 1977. This momentum we think will carry the market through temporary blips that may be caused by seasonality in the future; the post LBTT downturn after the frenzy at the end of March and even the economic clouds on the horizon.
Ironically just as the market should take a dip after LBTT returns to higher rates, the reintroduction of the First Home Fund at that time will inject a new domino effect through the market with increased first time buyer activity which then percolates up the property ladder.
Even if we do go into further lockdown restrictions, we have assurances from the Scottish Government that home moves can still be completed safely but there is of course still the virtual first viewing element for some time to come yet. We have recorded over 22,000 virtual viewings in the last month alone, and 140,000 since spring this year.
We think we are going to continue to be busy.