Accelerating the property market with a bit of help from C19
The first six months of 2020 saw some of the biggest changes ever in property sales, whilst the majority of market went into hibernation the auction market barely missed a beat.
This review will examine some of the 348 sales and £246m raised in a little detail, as we look back on a busy few months with some examples, feedback from buyers and how the rest of the year might play out.
How good is your memory, do you remember the “Boris Bounce?”
That phenomenon was in the air as we started the year in a ballroom and enjoyed a £70m sale. The message from the coal face, the sharp end of the market was muted optimism as our new PM found his feet and appointed Rishi Sunak as Chancellor of the Exchequer in mid February to deliver his first budget on March 11th - more of him later.
With the benefit of hindsight, will Q2 and Q3 2020 go down in the annals of time as the most tumultuous consecutive quarters in business in the last 25 years? As we entered late March there were a lot of questions - UK lockdown, what did that really mean and for how long? Would buyers bid without inspecting? What will be the effect on a struggling High Street? How hard will prices be hit across the board, will any sector be safe, or dare we ask, prosper from this malaise?
“Where the rental payments look sustainable and long term, or the opportunity to add value, buyers continue to compete at ‘pre-Covid’ pricing or more.”
From an investors’ perspective, not only did the Stock Market take a dive, but dividend income went with it. For the first time in its history, Shell cut its dividend in April in response to the dramatic fall in demand and at one point a negative future oil price. By the end of April, almost half of the FTSE 100 listed companies had either stopped paying or drastically cut their dividends.
The Government stepped in with their job retention scheme, loan guarantees, small business grants and rates relief and the Bank of England joined forces in cutting interest rates to .1% on 19th March.
All this has left a mountain of cash searching ever harder for a solid return, and the impact on our market is clear. Where the rental payments ook sustainable and long term, or the opportunity to add value presents itself, buyers continue to compete at “pre-Covid” pricing or more. Any anxiety about how or where to bid was swept aside in the continued desire to continue to trade and invest.
Simple numbers do not show the pace of change brought about by “The Covid acceleration factor”, it has been seen by many businesses, not just ours. Dave Lewis, Tesco CEO had estimated that doubling their online sales would take four years and several hundred million pounds to achieve. Lockdown accelerated this process to such an extent that it took a few weeks at a cost of £4m - it simply had to be done to get food to people in their homes.
Property auctions are not of course a matter of survival for anyone, but with all stakeholders working together we have crafted a very powerful method of sale online, and presented it to a very willing public. We now have over 8,700 users for our app alone. The digitisation of property sales is not just down to the Agents such as us, we are but part of the process. Without our help, buyers can now do their own 3D tours, comparable and legal research from their desks, adding as much extra data as they need to influence their decision.
In tricky markets such as this, those same buyers are as keen for the sellers to have to commit via the auction contract as the sellers are to secure an unconditional exchange with the buyers, so the process works well for both sides.