Property Market Report February 2022
The local market always goes quiet in December and January for obvious reasons. However the market has picked up nicely now and so far seems to be very similar to last year in terms of activity and appointments. Our diary has 26 viewing appointments in it on Saturday so for the second week in February this is pretty busy.
Over the last 18 months or so there has been a huge shortage of properties for sale on our Island. Manxmove normally carry a stock of around 250 properties but over the last 12 months we have sometimes had less than 30 for sale. Properties are still coming on the market obviously but they don’t stay in stock very long as they sell so quickly. This lack of property for sale is the main contributing factor to the fairly manic sellers market that we are experiencing at the present time. New listings up to around £500,000 normally attract immediate interest with purchasers sometimes having to compete with numerous other buyers on the same property. It is for this reason that some properties are selling for above asking price. Gazumping is not something that our company encourages. However, we are duty bound to put all offers forward to vendors and the vendors make the decisions at the end of the day.
Whilst supply and demand is the main reason for this buoyant sellers market the other factors that are fuelling this competitive market are the following:
- There are a lot of first time buyers in the market who are keen to get an the ladder asap as they see price rises of sometimes £1000 a week.
- A lot of tenants are also seeing the movement in the market and are coming out of rental property and purchasing instead as you can usually buy the same property with a mortgage for a similar monthly rental payment.
- Investors are still buying buy to let property due to the lack of interest they are getting from their money in the bank.
- Bank mortgage rates remain low and local mortgages are easily obtainable and at sometimes 90% of the purchase price.
- Whilst our unemployment has risen slightly if is still comparatively low meaning that purchasers are able to obtain and pay mortgages.
- There are still numerous purchasers relocating to our Island for various reasons.
I believe that there would need to be a fundamental change to one or more of the above factors to make any significant change to our market in the short term. Very small changes like a small rise in interest rates or a small rise in unemployment will only have a very small impact on the market.
The supply and demand situation we have experienced over the last 18 months has resulted in there being a huge backlog of purchasers who are keen to purchase asap. We still have a lot of this backlog as we head through 2022. In my view, if and when we get through this backlog, the manic urgency in the market should disappear as there will be simply less purchasers and hopefully more property due to the Spring and Summer increase in new listings. February March and April are normally really good months for new listings so hopefully stock levels will recover a little and some of this backlog will disappear. If this does happen it should stabilise the market considerably. There will only be so many purchasers out there so once we get through this backlog of purchasers that are finding it difficult to purchase, there is unlikely to be another large backlog right behind it, unless stock levels and new listings reduce significantly further, which is unlikely.
One of the changes in the market this year compared to last year seems to be the price level where most of this activity is. Last year it seemed to be up to around £550,000 but this year it seems to have increased to around £750,000 with some homes around £675,000 attracting huge interest and achieving above asking prices. I’m my view this is because a lot of vendors have sold last year in the lower price bracket which has released them to purchase further up the ladder.
The poor first time buyers continue to struggle I’m afraid as, not only are they competing with a lot of other chain free mortgage buyers, but they also have to compete with investors who tend to be chain and mortgage free. A chain free, cash offer from an investor, sometimes without a survey, is tempting to vendors for obvious reasons. New listings up to around £300,000 can still attract sometimes 40 viewing requests within a few hours of launch. Unfortunately for every month that goes by where one of these purchasers are unable to purchase it could potentially cost them £4000 as this is currently what some properties are appreciating at.
Whilst it’s a great time to sell and properties are achieving huge prices really quickly there are limits to asking prices as every market is price sensitive to a level. Even in this market, and even in the manic section of this market around £300,000, vastly overpriced properties will not attract interest.
Nobody has a crystal ball but my view on the future of our market for what it’s worth is that we will get through the backlog, the Spring and Summer months will see some nice healthy new listings, stock levels will recover, there will be more choice therefore less competition between buyers and prices will stabilise. As stated above, I think the market is highly unlikely to crash unless there is a significant change to one or more of the factors that is fuelling it.
Graham Wilson FNAEA (Dip REA)
Manxmove Estate Agents