There are rumours going around at present that there is a huge surge in property sales at the moment and that this is due to a massive influx of new residents coming to our shores from both UK and further afield. A good time then perhaps to reflect on the local property market since COVID19.
Well, I can confirm that part of the above rumour is true that’s for sure as the Island is definitely experiencing a huge surge in property sales at present. So, where are these buyers coming from and what are they buying ? I would say over 80% of our residential sales at present are still from local clients and that most of the activity in the market is still up to around £600,000. Whilst there has definitely been an increase in enquiries received from off Island buyers due to the recent lockdown and subsequent border closure, the vast majority of this interest remains at the initial early enquiry stage only. Very few purchasers will agree a sale and fully complete the transaction without a physical viewing, even in this market. Whilst these enquiries may well contribute to future residential sales figures, most of these potential clients will only make offers after being able to view in person. Consequently these potential future transactions would only be due to complete approximately two to three months after our borders re-open. For the above reasons, as far as Manxmove is concerned, this increased off Island interest has definitely had little or virtually no effect on negotiated sales figures over the previous three to four months.
Manxmove have been producing Virtual Viewings for over three years now and this new initiative proved to be invaluable during lockdown. Both local and off Island prospective purchasers took full advantage of this service by virtually viewing properties from the comfort and safety of their own homes. We also expanded on this service during lockdown to include live Virtual Viewings where our agents visited our properties and connected live with viewers via Facebook or Facetime. Consequently we were able to sell properties to some clients that were brave enough to purchase unseen, but in reality this really only equated to a few smaller transactions.
Whilst a lot of UK lenders have apparently trimmed their lending criteria to include insisting on larger deposits following COVID, most local lenders are offering pretty much the same products today as they were pre COVID. When speaking to local independent financial advisors and local surveyors they tell us they have never been busier with mortgage applications and surveys. This is reflected in the current timescale taken from acceptance of offer to survey and mortgage offer as, in some cases, this is taking twice as long as it normally does.
Like all other local Estate Agents Manxmove were closed for over two months during lockdown, as we didn’t feel comfortable potentially putting our staff and our clients at any risk. We re-opened on 18th June and, having continued to take phone enquiries whilst we were closed, found ourselves re-opening with over 80 viewing and valuation appointments to make, which showed local market confidence despite the pandemic. I am also delighted to report that since 18th June it has been business as usual at Manxmove with a full compliment of staff, just like it was pre COVID.
So, if there is no massive increase in sales to off Island buyers, what is fuelling the present market and making it so urgent ? There are several reasons for this, but the main one is clearly supply and demand. Keen and motivated no chain purchasers are out there in huge numbers at the moment and local market confidence has never been higher. As stated above, these buyers are predominately local buyers moving up and down the price range and most of these buyers are keen to take advantage of the historically low mortgage interest rates. Manxmove are around 40% down on stock compared to last year (hence the supply problem) so a lot of our negotiated sales are from new listings. Properties that are not new to market are still gaining healthy interest but at nothing like the levels of interest new listings attract. To give you an idea of new listing activity, a recent detached bungalow we listed at £365,000 in Onchan attracted 23 viewing appointments within a day of launch with full price offers being made prior to the actual viewings.
Due to the above, prices are increasing steadily now as more and more buyers compete over the same properties which is resulting in numerous sales at above asking price. This is not something that any agent generally encourages,as these transactions are complicated and can result in a bidding war and even a closed bid situation, where buyers put their best offer in writing on a certain day and certain time. If you consider that if an agent has eight offers on one property then he/she potentially has seven disappointed clients per transaction. Price increases are obviously being fuelled by these over asking price transactions as agents value by comparing other similar properties. This means that if a three bed 30s semi went for £10,000 above asking price, then the next three bed 30s semi that the agent values will be at least £10,000 more, and so on ,and so on. There is a limit to this obviously as the same 30s semi launched as a new listing at say £25,000 above the previous price achieved for this type of property would struggle to attract interest, even in this market.
First time buyers are out there in huge numbers and this is really important to any market as these chain free buyers obviously release other vendors to buy further up the chain. The only thing that appears to be constricting even more first time buyers getting on the ladder is the ability to save the required deposit. Sadly, if first time buyers are able to save the mortgage deposit they genuinely can buy the same house with a mortgage for virtually the same that it would cost to rent it, but in many cases these buyers are having difficulty saving the deposit as they are paying rent. Part of the reason for this is that the rental market is also booming with some three bedroom semis achieving £1100 per month, which is well above the average first time buyer mortgage payment.
Investors are also confident enough in the local market to be cashing in other investments in favour of investing in the buy to let property market, which despite there being no bargains out there is still returning a respectable yield. Investors have always been in the marketplace and historically vendors have been tempted by sometimes below asking price offers as investors tend to be able to offer cash no chain uncomplicated offers, which is obviously preferable to a chain offer. However, todays investors are now also paying asking price for new listings as properties that are new to market attract massive interest literally within a few minutes of launch.
The future of our market seems fairly optimistic then with only the availability of new listings constraining it slightly. As we receive more and more enquiries from off Island a percentage of these enquiries should boost sales for several months after our borders open. These off Island buyers also tend to buy at the higher end of the market which should hopefully increase the activity at above £600,000 and beyond.