Bidding wars and 20pc house price rises

As Melissa Lawford points out in The Telegraph today there are signs that some buyers are starting to put rural relocations on hold as lockdown eases, while newly-vaccinated downsizers enter the market, boosting supply. Rightmove reckons that supply of available property is at a record low – I think we’re missing as much as 30% of the usual stock that would usually be available but there are signs that more is coming.

Agents tell me that they are seeing more house and they are starting to share more. We’re getting calls from private sellers who are thinking that they may be able to save themselves a fee by dealing with us direct and there is evidence that the houses that didn’t come on in the first quarter will come in the early summer.

House prices in some areas seem to be up by 10-15% on last year as some people panic and bid whatever it takes. We bid on a £700k property in Wiltshire earlier this week offering £30k over the guide but we were told that ours was one of ten offers with the best over £800k!

As our friends at Property Vision observe “We estimate that there are, on average, double the number of buyers in the market overall and in certain areas – the West Sussex South Downs for instance – that is more like four times. In such an environment prices can only go one way and, a sure sign of a true sellers’ market, this includes second as well as first-rate properties.”

They go on to ask “Will this go on? With a relatively fixed supply (and getting tighter because most sellers are frustrated buyers), much hinges on the outcome of the ‘great office debate’. Even if the likely hybrid outcome comes to pass, what will certainly continue is the expansion of the ‘commuter belt’. If the journey to an office in London is twice a week (or once a week with a sleepover for one or two nights) then Devon, Yorkshire and Shropshire become perfectly doable. The corollary of this is that the more traditional commuter areas, where the main attraction is first-class transport, may become relatively less attractive – relatively being the operative word if green fields continue to be valued more than London pavements.”

Just at the moment there is frantic competition for what is for sale with ‘Best & Final Offers’ often the usual way that agents are closing sales. We’ve had three houses that we have managed to lock down before the rest of the world has seen them but clients had to make punchy bids. The phrase ‘a property is what someone is willing to pay for it” has never been more appropriate.

I think things will calm down as supply picks up but for now it’s like joining a bankers drinks party that started three hours ago. Lots of people with more money than you who are already having a wail of a time! If you don’t want to join in then probably best to sit this out and come back in September.

But Property Vision have a chilling warning – “Money is cheap and that remains an essential driver for the market as a whole. The interesting time will come if inflation takes a hold with the post pandemic recovery and interest rates are forced upwards. With the current levels of debt, the consequences wouldn’t be pretty, not only for the housing market but also just about every nook and cranny of the economy. 

“There must be many politicians and central bankers with their fingers crossed.”.