As soon as the fog of the first lockdown had lifted, the demand for homes rocketed as people raced for more space, a better work/life balance, and the potential bonus of a Stamp Duty saving. This trend continued in the last quarter, as people reappraised their requirements of what they needed from a home; a constant fluctuation of the practical and emotional needs of peoples’ lives.
The initial post lockdown flurry of activity somewhat relaxed during Q3, with consumer confidence being knocked by the fear of inflation, queues at petrol stations and possible produce shortages. However, the underlying strengths of the Thames Valley are still compelling with circa. 1000 properties sold in Q3 in Reading alone. Overall, Haslams Market Intelligence data suggests that the current rate of sale for the Thames Valley is set to exceed both 2020 and 2019 reservation figures, but this will largely depend on the build program for new builds being delivered on time in spite of supply chain issues and the pressure on conveyancers.
The Thames Valley strength is also demonstrated by an incredibly buoyant jobs market and when coupled with interest rates remaining at an all-time low, we are continuing to see strong investment. When considering that qualitative data suggests people are simply not willing to put their lives on hold, the result is an incredibly strong lettings and sales market. In turn, this has driven capital values, rents, and yields.
The Haslams Price Index indicates that house prices have increased by 4% YoY and 1% compared to the last quarter. For new builds, the average value is now £527,250 (national average for all properties is £338,462. Source: Rightmove). It is worth noting however that the demand/supply gap may be starting to close with more properties being listed – approximately 14% more in September versus August. This is perhaps due to the perennial desire to move into a new home prior to Christmas and in Q3 we have seen people looking to secure properties earlier in the season: building in the possibility of delays.
Similar behaviours have been evident within the rental market. Data from Goodlord has shown that 94% of tenants no longer have any cause for concern over the pandemic affecting their income and ability to rent a home, which follows high levels of activity in the market. In terms of rental values Q3 saw a 5% increase caused by the lack of stock and the resurgence in the number of international tenants; travel has opened back up and students and foreign business people returned. As a consequence Q3 also saw an all-time low for void periods.
As outlined, the Thames Valley is incredibly resilient with significant potential for future growth. Q2 and Q3 have seen investment in key infrastructure projects and upgrades to transport links are well underway. Green Park station on the Green Park Business Park is expected to be open for public use by June 2022 and Crossrail also will soon be running; the delivery of this significant investment will not only enhance the local connections for existing residents, but attract new visitors and prospective movers, as we’ve seen in the past.
New build developments saw a notable decrease in visitor levels in during Q3. However the quality of visitors has remained high and one development even achieved an impressive rate of sale of 1 reservation for every 2 new visits. Typically, the rate is closer to 9 visitors to 1 reservation. Prospective buyers are more serious and are in a better position to buy than we have previously seen in the last 2 years.
As we enter Q4 there is an exciting opportunity to achieve an excellent return on investment, with demand continuing to remain at a high. Although demand will be high, the current property values are unlikely to be sustained in the long term, which suggests that people considering a property sale should act soon.