Insight - what’s really going on in the property market?

If you’re in any way connected to estate agency all it takes is a quick glance at Facebook or LinkedIn to know that agents across the country have been experiencing ‘record months’.

Busy, I don’t think, is even remotely the word to articulate accurately the level of enquiry, activity and engagement most agents have been seeing since the market opened back up.

One agent I spoke to in August has recruited his two daughters into the business just to keep up with demand for viewings while he attempts to convert all of the valuation leads he’s been receiving. He quite literally used the words: 'We’ve only been open four years, we have never seen it like this!'. Christmas in July indeed.

The above isn’t an uncommon story. Activity is at all time highs, (asking) prices are at all time highs. Graham Lock and I did a session for his FIA members throughout lockdown about preparing for the bounce back. And bounced it has.

But (and to the letting agents reading this please forgive me, I am often quite sales-centric in my conversations and regrettably these few hundred words likely reinforce that shortcoming) are agents actually making any money?

Leads, valuations, listings, viewings, and pipelines are all important. But I’m keen to see the numbers of exchanges. 

I’ve spoken to companies this week with tens of millions in commissions sitting in unexchanged, uncertain pipelines, with only slow signs of progressing. 

Increasing prices generally mean stretched affordability for buyers who need to raise a mortgage, and as we’ve seen over the past few months there are now significantly fewer low deposit mortgages available.

With the unwinding of the furlough scheme together with Brexit uncertainties, it’s not unreasonable to expect an amount of economic turbulence between now and the end of the year. Fold into that picture the rumoured increase on Capital Gains Tax for higher earners disposing of investment properties and holiday homes, which could be announced as part of the Autumn Budget, and we could see a significant increase in stock levels in some areas before Christmas which may rebalance said increased values. This may rebalance buyer excitement and incite cold feet or a change of heart.

Despite the buoyant market now, it would appear, from what I hear every day, the money isn’t anywhere near in the bank. Some deals that were agreed pre-lockdown are still yet to complete (one of my team told me that solicitors in his area of Camberley are actively turning away new business) and pressure on mortgage lenders and brokers is also rising. 

This is due in part to the sheer level of processing capacity required to deal with current purchase applications at the same time as the support required for the two million existing homeowners on the Mortgage Payment Holiday scheme. 

With so many factors at play, it’s quite possible that we may see a rising number of chains unwind as time goes on, with an increasing number of fall throughs due to buyers having cold feet together with a potential increase in down-valuations.

That’s not to say the current picture is bleak – far from it. I try to live in the realistic world and try to balance states of both wonder and worry for the future.

The best agents are looking beyond the current ‘honeymoon period’ and are now thinking about how they can maximise their longer term pipelines to insulate their businesses from the possibility of further market turbulence. 

*Sam Hunter is Chief Operating Officer at Homesearch