With the lockdown extended (for now) and property sales in many parts of the UK on-hold, lots of us have questions. When will conveyancers and agents reopen their offices? When will viewings start again, so surveyors can go back to work and people can actually transact? And most importantly, what’s going to happen to the UK’s property market throughout the rest of 2020?Though whatever happens won’t be geographically uniform; here we’re going to look at the data to get a better understanding of what the London property market has in store for us this year.
Of course, information is changing rapidly and the so-called ‘new normal’ is a paradigm shift, not just for the industry but for society, at large. While a lot of things are unclear, what is clear is that when things start to open up again, we will all have to adapt to new ways of buying and selling property, at least for a little while.
Property sales have slowed over the last few weeks and making any concrete predictions about future house prices could be considered a fool’s errand.Government stimulus is already having an impact and ways to continue to support the property market have been discussed from streamlining the sales process using technology through to reducing stamp duty.
When there’s a significant contraction of activity there’s also a contraction of the associated data; the evidence for our assumptions. However, there is data available that’s still going to give clues about the overall future of the market, as well as providing insights into what is happening at each stage of the house buying process. So, while it might be difficult to analyse completed sales right now, data around inquiries and buyer interest is available and extremely valuable to have.
Here, we want to have a look at what data we need to consider and where we can find it. Whether you are aiming to purchase a property in Acton or you are trying to sell a buy-to-let property in Islington, in the current market, it’s going to be important to have a bird’s eye view before you try to transact.
Where to Find House Price Data for London and What to Look For
Let’s get into it and examine what sources of information you should be considering in order to assess London’s property market. The focus here is going to be on the data most useful for property investors and buy-to-let landlords but there’s no reason why homeowners wouldn’t find the following useful, as well.
Average Gross Rental Yields
Whether you are a seller or a buyer of a property, the average rental yield for an area is an important factor to bear in mind; giving you an overview of how local rents are performing, in line with local property prices.
A low yield can be an indicator of higher-than-average house prices with strong homeownership demand keeping prices high and investors priced out of the market.
Conversely, a higher than average yield for the wider area would tend to indicate lower prices and be more appealing to the investor buyer. Too high yields though could signal that the location may indicate low homeowner demand keeping prices low.
So, within this mix of factors and market signals a property investor, scoping out buy-to-let investment opportunities, would be looking for balance; a goldilocks zone, where the market’s neither too hot, nor too cold.
Where To Find Data
You can find local rental yields for all areas of the London property market from Acton to Woodford, updated daily on our London rental yield map.
Related: How Is Rental Yield Calculated?
Average Time on the Market
The length of time it takes to sell a property should be an important factor to bear-in-mind and there are many aspects to this that can have an impact on timescales; from the agent through to the property being priced correctly, in accordance with the local market. Other factors include marketing and presentation and the house getting seen by the right buyer, at the right time.
But with the best will in the world and with everything properly in place, the local market will still-and-always influence the time it takes to buy and sell. So, whether you are selling a flat in Camden or an apartment in Clapham, if you know the average, time-to-sell figures for that area you will have a benchmark to aim for and a greater understanding of the market environment in which you are operating.
Where to Find the Data
There are a number of websites where you can view the average time it takes to sell a property but it is important to understand what kind of average you are looking at. Mean-averages can be influenced by outliers (extreme numbers in the data set) whereas a median-average flattens these outliers out and can, therefore, help you paint a more real-world picture of what is going on. Here is a link to the Acton property market, in London, on Home.co.uk, where you can see both mean and median averages for time on the market, according to property type.
This kind of information can be very helpful, when you are trying to compare like-with-like.
House Price Changes
As a nation, we are obsessed with house prices. Discussing how our 3-bed, extended, semi-detached house in Fulham has increased in value or how our one-bed, apartment investment in Battersea has changed in value... These are favourite pastimes of the British public.
But a really accurate overview of actual prices is hard to get a handle on. The question is, therefore, what kind of property sales can give the best indication of price changes and where can you find the latest information, particularly in a slowing market, as we find ourselves in, today?
So, let’s cut to the chase. Ordinarily, we would look to sold prices, as the best indicator of changes in value in the property market. But these are not ordinary times. Transactions are partially on-ice and sales data can have a lag of three months, before coming through from the Land Registry.
Throughout 2020, in a quickly changing market, you should be looking closely at ‘marketed’ property price changes, rather than just sold price changes, to build a more accurate picture of what is going on in your area of choice.
While sold data will always be the gold-standard way of understanding value changes, factoring in marketed prices and average market value will give you a more responsive view of what is really going on.
Where to Find the Data
One of the best sources of information for what is going on with house values is Zoopla (here, we link to a report for Forest Gate) where the average price paid is presented alongside value changes and the current average value. This gives us a much clearer view of real-time prices across London. And, with Zoopla, you have the ability to use filters to select a specific property type. So, if you are considering buying a detached house, a terrace or a flat, you can view those values, specific to your preference.
Whether you are a buyer or a seller, the level of buyer demand is probably the best way to assess how strong and how resilient a local property market is at any given moment. For example, if there are one hundred properties for sale in Leyton but only two have sold in a month, it’s fair to assume that buyer demand is a flattened affair.
And in the new world we are in, where uncertainty is certain, when we start trading property once more, the level of buyer demand in the marketplace will be an indicator of how quickly things will start to pick up pace and to what degree we can expect changes in property prices throughout the remainder of 2020.
Where to Find the Data
There’s a fantastic and free Chrome extension, called Property Insights, that will give you the buyer demand and other data, for a given postcode district, while you are searching property listings on key property portals. So, if you have a property in mind, that you wish to buy in Bloomsbury or you are considering selling a property in Hammersmith, as you search the portals, this tool will show you what the market is like, in those areas.
Property Market Data for London, May 2020
The London property market is changing fast, but let’s look at a snapshot using Home and Zoopla in some key areas of the capital as of May 2020. If you're a private landlord, find out how to advertise on Zoopla and Rightmove for as little as £1.
Interestingly, we looked at the time it takes to sell a London home a few years ago in 2017, and the average time to sell was 60 days. We’ve also revealed a few tricks of the trade to ensure your home sells quickly for the best possible price, which you can read here.
What’s Next for the London Property Market?
Despite everything that is going on, there is still a demand for housing and in London, properties are highly sought after. There will always be sellers, needing to sell and buyers, needing to buy. Everything is more difficult to do, right now. And that means there is pent-up pressure in the market as those, eager to transact, wait for the opportunity to do so. Good marketing, a decent London estate agent and a willingness to be competitive with regard to pricing, are more important than ever; especially for those sellers, wanting to attract buyers during lockdown.
The lockdown won’t last forever but when the property market returns to the ‘new normal’, the economy of the marketplace landscape will be different. And that’s why, if you are thinking of investing in London, it’s more important than ever to stay ahead of the competition by keeping on-top of data and market trends.
At Portico, we can help you sell your property for the best price in the shortest time possible, and we can help you generate high returns and maximise tax efficiency through a lucrative property portfolio. If this sounds interesting, give us a call or email firstname.lastname@example.org for more details. You can also receive an instant up-to-date sales or rental valuation on your property from the comfort of your own home with our online property valuation tool.