Lockdown ‘not hurting market’ despite dip in asking prices

Asking prices are down for the first time in many months.

It’s a small drop - an average of 0.5 per cent - but it comes despite continuing strong buyer demand since the start of England’s second lockdown. 

These figures come from Rightmove which says new sellers appear to be pricing more keenly, to improve chances of a quick sale and beating the March stamp duty deadline. 

There was an initial temporary dip on Rightmove after the new lockdown was announced, but buyer demand was still up by 28 per cent on last year during the three days between the announcement and lockdown starting. 

The first six days of lockdown itself saw demand bounce back to being 49 per cent up on last year.

Tim Bannister, Rightmove’s director of property data. comments: “We know from a recent Rightmove study that sellers are twice as likely to sell if they agree a sale based on the first price at which their property goes on the market, something that’s even more important now as we move towards the end of March and the end of the stamp duty holiday.  

“If your initial asking price is too high then you’re less likely to get an offer even after you’ve cut your price back to a more realistic level. Our revised prediction of a seven per cent annual increase in prices in 2020 looks to be on track, since the annual rate has jumped to 6.3 per cent with a month to go.”

The portal has conducted a study of different asking price bands between £100,000 and £500,000 and it shows stronger growth in activity in the higher price bands, where buyers make the biggest stamp duty savings. 

The number of sales agreed for properties priced at between £100,000 and £200,000 is up by only 16 per cent on this time last year, which contrasts with sales agreed more than doubling (up 106 per cent) in the £400,000 to £500,000 band. 

It is a similar picture for the drop in the number of days from the date a property is listed on Rightmove until it is marked under offer or sold subject to contract by an agent. 

Overall, the time to secure a buyer is at a record low of 49 days, with the £400,000 to £500,000 price band seeing a drop of 23 days, compared to the £100,000 to £200,000 band seeing a drop of just eight days.

Regionally, the south is performing best relative to last year for sales agreed, up 72 per cent in the East of England, and up 69 per cent in the South East. Nationally, sales agreed are up 50 per cent on last year, a softening from the 70 per cent year-on-year jump in last month’s report.

Rightmove now estimates that there are 650,000 sales currently going through the buying and selling process. That is 67 per cent more than at the same time in 2019, and illustrates the scale of the challenges for mortgage lenders and the legal profession to get deals to legal completion. 

Around a third of transactions in the pipeline would still be exempt from stamp duty after the holiday ends, due to being below thresholds or qualifying for first-time buyer exemptions.

Bannister says: “After some brief hesitation as people waited for the detailed government guidance and legislation, it’s now clear that home-movers are carrying on with their searches and sales during this second lockdown in England with the market staying open. 

“This ongoing activity means that the processing log-jam continues to pile up because of the sheer number trying to reach the finish line by the end of March. With 650,000 transactions in the pipeline, millions of people are on tenterhooks until their sale or purchase has completed.”