Published: 24/05/2021 By Oliver Chapple, Founder & CEORecently, I was speaking to a friend of mine who runs his own estate agency. Like many agents, the past 12 months have been a roller coaster; but since the start of 2021, he – and many other property agents like him – were experiencing what he had heard being described as a ‘1 in 300 year phenomenon’ within the property market.
This 1-in-300 year phenomenon appears to be an extraordinary convergence of pent up demand for property and the breakneck speed at which property transactions are taking place, most notably outside of London as far as Cornwall to the West, and all the way up to Cumbria where sales in the last few months have regularly been reaching a sale-agreed price 25%, sometimes more, over guide price.
Also, it’s been often the case that homes are selling in less than a week from being on the market in many subprime areas of the UK from going on the portals – that’s an incredible surge in demand, and one which many estate agents are struggling to keep pace with!
The fast and high transaction rates coupled with a shortage of property in the straight supply and demand curve is the core data point for this trend; but also undoubtedly linked to buyers feeling the pressure to complete sales before the Stamp Duty holiday and the step change down comes to an end in September this year.
To see the extraordinary supply and demand curve in action, try turning on the ‘show sold properties’ button on a Rightmove search and see the astronomical numbers of properties that have sold compared to what’s for sale in many of the hotspots. Don’t believe me? Just take a look at a few miles around Farnham in Surrey and see what I mean - It’s crazy!
More Speed, Less Haste
His comments about this phenomenon aren’t just being felt by his agency, either. In April, Buy Association reported that in a survey of over 5,000 estate agents, 74% of them believed that the ‘lack of speed’ was a genuine problem that affected their property sales. And, with so many new instructions being won by agents during this time of plenty, this problem was only being exacerbated.
The rush to keep up with the surge in property transactions is of course having knock-on effects outside of estate agencies. Lenders, conveyancers and surveyors have all come under significant strain to keep up with the increased demand for transactions; meaning that the entire home selling process is believed to be taking up to 43 days longer than at the same time in 2020.
The big question is how long will this last? Whilst this surge in demand hasn’t been unexpected, it’s what comes after the end of the freeze this September which could put the brakes on this property rollercoaster. Will it slow down in late September/October when the new stamp duty step down kicks in, or will that pent up demand last into 2022 and beyond?
The Big Property Crunch?
Here at Webdadi, we talk to a huge number of property agents all across the country; and the one thing that has been consistent ever since the end of 2020 has been how ‘busy’ they all are. But, one thing that many haven’t considered is what happens come the end of September 2021 with not only the unfreezing of Stamp Duty, but also a huge shift in the way people work the usual 9-5.
The feeling is whilst employees seek to strike a better life balance in places like Cornwall, there may be many furloughed employees who are going to come back shortly; but many employees feeling they could pull off a hybrid work from home and work from the office deal with their employers, giving them flexi-working either two to three days a week in the office that would be worth the travel costs trade to property lifestyle costs far out of town.
So, this could well be a trend that’s not going to slow down and allow subprime London family areas house prices to rebalance the exit of its residents any time soon, certainly in relation to the sub-rural and rural hotspot areas house prices where this overspending trend is going on.
In addition, September 2021 will also see the much-heralded furlough scheme will also come to an end. As of April 2021, there were an estimated 11.5 million jobs that have been furloughed under the scheme, but there’s absolutely no guarantee the jobs will be re-instated – so there’s a huge question mark over whether the people on furlough will be able to return to their jobs, or will possibly have to start looking for a new job in an already turbulent market.
For the property market, this could very lead to a very big crunch following a very big bang. Not only will the cost of buying a property go up for those looking to spend over the £125k threshold, but you’ll also potentially have a huge volume of people simply not being able to afford to move home due to changes in their circumstances.
There’s also another factor which could play its part in a big crunch, and that’s the continued expected rise in property prices. Whilst this is of course good for homeowners, it’s expected that this rise is going to be primarily driven by a lack of supply – and this is where that huge rush on transactions this year could have an unexpected side-effect…
Too Busy to Get The Easy Stuff Right?
It really has been a case of ‘striking whilst the iron is hot’; but the big bang we’re seeing has meant that the internal staffing resources for property agents and their partner finance agencies have been stretched mightily thin. As a result, what we’re seeing is a noticeable decline in estate agencies getting the easy stuff right when it comes to their own marketing activities – and this is really important.
Whilst many agencies will have perfectly serviceable websites, we’ve found that for many, the need to rush through transactional processes has led to a sharp decline in digital marketing activities; such as regular content posting and following basic SEO best practices. Whilst this may not seem like a big deal, the long-term effect for a website’s performance can be incredibly damaging – including drops in website search visibility and inbound lead generation; two critical components of how agencies generate new sale instructions.
Remember: that with a potentially smaller pool of new vendor instructions potentially coming to the market, agencies will need every advantage to draw potential customers away from their competitors. For the savvier of agents already thinking about how to improve their business before the end of September, they’ll be in pole position to capture more new customer leads than their rivals. And as for the ones who are only focusing on rushing through as many property transactions as they can now? Well, they run the risk of their brand being less visible, and less searchable, too – and we all know what that can lead to…
With new sale instructions potentially becoming scarcer as we enter the third quarter of 2021, it’s vitally important that agencies do everything in their power to being the first port of call for the people searching for their services – and not just make hay whilst the sun shines.
Struggling to generate good quality inbound leads to your website? Why not book a 20-minute consultation with one of our expert website consultants? Just hit the link below to get started…