I’m usually loathe to jump on the bandwagon of reports about booming markets and unprecedented demand, but right now it’s hard to ignore, so here’s my take on it.
Firstly, let me say that I do appreciate the confidence that comes from positive press. The impact of positivity on property prices is as powerful as this sentence is problematic to read out loud! The fear of missing out is very real and across all our offices we are already seeing increased activity across the market in 2021.
However, I always challenge our team to consider if the burst of activity is sustainable. Is the confidence we are experiencing really and truly built on strong foundations because for our clients to make good decisions today, they need to consider the challenges and opportunities that might present into the future.
And I’m pleased to say that I think the market confidence we are currently seeing is exciting. And more importantly for our clients, I think it is sustainable. Yes, there is always a tendency to overstate the buoyancy of the market but it’s moving in the right direction and the fundamentals that will underpin that growth are strong.
The thing is COVID wasn’t the bomb that blew up the property market. It had actually been in a gradual decline for a couple of years. COVID certainly made it tougher but it had already been slow. So, I believe what we are seeing now is not simply a post-COVID rebound but rather the beginning of a longer-term trend towards value growth.
Why? Well to start there was room for growth on the back of the previous slowdown. Then there is the new surety we have that interest rates will remain at record levels into the future. Pre-COVID I think there was an underlying belief the magic run of record low-interest rates could end any day.
Combine that with a recognition that international travel is going to be somewhat restricted probably for years to come and the value we place in our homes has increased and the security that comes from investing in property is accentuated.
It is still important to recognise that differences will always exist across markets. Demand for apartments is not as strong as for houses, however, it is very interesting to note that COVID rent adjustments did not dramatically impact values. I would traditionally expect a decrease in rental returns to be reflected in sale prices but that is not what our team have experienced. That is great news for investors now we are also seeing those rent adjustments plateauing.
So, I think we are in a good place. As always, I will advise caution. Not every sale is guaranteed to set a record and clearance rates will inevitably rise and fall but overall, I think the positive property mood should be here to stay and with that comes exciting opportunity.