It’s very difficult to describe the property market at the moment. The level of activity is crazy, with brokers and banks reporting record business levels. In an environment with so much uncertainty, this just isn’t normal. So, how long can we expect it to last, and what steps can brokers take to make the most of the current environment?
The property market started the year on a positive footing. It was busy before lockdown and returned with a surge in May and June. The announcement of the Stamp Duty holiday in July simply turbo-charged this activity and we currently find ourselves in a situation where there isn’t enough capacity in the system to cope with demand. The latest I have heard is that panel managers are working on delays of two to three weeks to carry out a valuation, but there still appears to be some reticence in outsourcing these valuations to smaller firms.
At Arnold & Baldwin, we got everybody back from furlough very quickly and we are actually now recruiting for more surveyors to handle the demand. This is an interesting situation as I don’t think anybody truly believes that the market will continue at this pace.
There are so many different events coming up that could really impact things, and the market is in a very vulnerable position. However quickly the economy recovers from COVID, widespread job losses are expected next year and there is a clear correlation between unemployment and property prices. Then we have Brexit coming up, the impact of which remains completely unknown. And, of course, there will be other factors like the Stamp Duty holiday coming to a close at the same time as Help to Buy ending in its current guise, and the increase in Stamp Duty for foreign buyers.
At the same time, there is reason to anticipate some resilience in the property market. We have noticed a change in people’s behaviours regarding moving home. Whereas many people would previously put off a move because they were waiting for Brexit, or the results of a general election for example, they are no longer being led by external factors but putting their lives and their families first. Also, whereas people previously made purchase decisions on where they worked, now it’s based on where they want to live. The process seems to have become more emotive, which could indicate that, while economic factors on a macro level might be negative, people who have the money will still be inclined to move home based on their own personal circumstances. This is by no means guaranteed, but it is one way that the market could pan out next year.
But what steps can brokers take to make the most of the boom in activity now?
In such a competitive market, it’s important that your clients are well-prepared when they make an offer on a property, so work with them on lining up their professional team, including surveyors and solicitors, so that when they find somewhere to buy, they can demonstrate their ability to move quickly.
In order to overcome valuation delays, you could also consider de-coupling any home survey that is requested by your client from the valuation that is required for the mortgage finance. If you submit a mortgage application requesting just a standard valuation, there is a greater chance of this valuation being carried out remotely without a surveyor needing to visit the property. This should mean that you are more likely to avoid being stuck in a queue for a physical valuation and that the enquiry can be processed more quickly.
Your client could then instruct a Homebuyers Survey or a Building Survey, for peace of mind, separately from the mortgage valuation, and this could provide you an opportunity to earn a referral fee. There are things to think about, of course, and instructing the valuation and the survey separately, rather than together, may be slightly more expensive for your client. So, it is important that you discuss the options and the considerations and follow the approach that best suits their circumstances and expectations. Many homebuyers, however, will value a potentially faster process in securing a mortgage offer, particularly in a market where they may be competing with other buyers.