THE PROPERTY MARKET

SOUTHERN

A REVIEW OF THE KEY TRENDS IN THE NATIONAL AND LOCAL HOUSING MARKET.

Analysis by Dataloft | Summer 2020

2 | SOUTHERN HOUSING MARKET UPDATE

A STRONG PRE-COVID MARKET

Summer 2020

SALES

Mortgage approvals56,161 March 2020 vs 62,086 March 2019

↓9.5%Property sales 86,200 March 2020 vs 95,540 March 2019

↓9.8%Gross mortgage lending £22.6bn March 2020 vs £22bn March 2019

↑2.9%House prices £231,855 March 2020 vs £227,104 March 2019

↑2.1%New private homes built (completed)39,550 Q4 2019 vs 39,320 Q4 2018

↑0.6%

Source: dataloft, Bank of England, HMRC, ONS, MHCLG, RICS

SpringImproved consumer sentiment following the election result and Brexit clarity was reflected in the spring housing market, with annual house price growth of 2.1% and an annual increase of 3.7% in mortgage approvals in Q1 2020 (despite the fall in March). The UK went into lockdown on 23rd March, which resulted in a -9.8% drop in transactions in March, while April volumes are estimated to be half the level of last year. On 11th May, the government announced the UK COVID-19 exit strategy and England’s residential market reopened on 13th May.

EconomyFollowing lockdown, the Chancellor announced unprecedented support for business and individuals and the Bank of England lowered interest rates to 0.1%. Despite these measures, the economy has been affected, already contracting by 2% in the three months to March (ONS). The Bank of England expects the economy to contract by 14% in 2020, only returning to pre-COVID levels by mid-2021. The nation has begun its journey back to normality but it will take time for the economy to recover.

Post-COVID-19The first day of the housing market reopening in England saw 5.2 million visits to Rightmove, up 4% on the same day last year. This release of pent-up demand will help get the market back on track. Agents believe transactions will take six to nine months to reach pre-COVID levels and prices will take around 11 months. Long-term price growth expectations are similar to pre-COVID levels, with average growth of just over 2% per annum over the next five years (RICS).

COVID-19 caused the residential market to pause following a spring bounce. As we exit lockdown we hope to see the strong pre-COVID market return.

Analysis by Dataloft 3

A STRONG PRE-COVID MARKET

LETTINGS

Average rents April 2020 vs April 2019

% increase in rent per annum over the next 5 years

A garden

Homeworking space

Broadband speed

Less urban area

13th May, 4% up on the same day a year ago.

↑1.5%

30%

21%

16%15%

↑2.5%

The rental marketDuring lockdown, agents reported weakened demand and fewer landlord instructions, which is no surprise considering restrictions on moving. Rents increased by 1.5% in April, but it can take time for supply and demand pressures to show. Agents expect some rental falls in the coming months, but the long-term projections stand at 2.5% per annum over the next five years. With 39.5% of existing tenancies set to expire in Q3, it will be a busy quarter for agents.

The Homemover Survey suggests that COVID-19 is likely to have left a legacy of consumer behaviour change, shifting the relative importance of house buyer requirements.

5.2m visits to Rightmove

Source: Dataloft Homemover Survey, showing response of those who had been actively looking for a new home before lockdown and still intend to move. Respondents could choose more than one option.

What requirements in a property are now more important than they were pre-lockdown?

30%

25%

20%

15%

10%

5%

0%

e

4 | SOUTHERN HOUSING MARKET UPDATE Summer 2020

THE LEGACY OF COVID-19 Over the last few months, we have seen unprecedented changes to our lives, some good and some bad, but which are here to stay?

TransportCOVID-19 has caused people to consider alternative ways of getting to work, avoiding public transport. The government is encouraging schemes such as pop-up cycle lanes, wider pavements and school streets. Many local authorities have already begun to make changes, and the government has invested £250 million to secure a lasting legacy of greener, safer transport.

Outside space

Following lockdown, the importance of access to outside space is likely to increase. Currently only 66% of flats have access to private outside space, compared to 97% of houses. We may see a shift in building design and the

premium already established for homes within close proximity of green space could increase.

Working from home

Lockdown has proven to many sceptics that working from home is viable and even convenient. Before COVID-19 only 5% of people mainly worked from home and less than 30% had ever worked from home. We don’t expect the end of offices: many miss them and they have great social benefits. However, working from home could become more common and with it, the relative importance of commute times, broadband speeds and space for a home office.

51%valued time saved on commute most while working from home.

£2,500price premium close to green space within 100 metres, compared with 500 metres away.

70%increase in people on bikes since lockdown.

Source: dataloft, Vodafone

Source: dataloft, ONS

Source: dataloft, Gov.uk

Lockdown insights

e

SOUTHERN HOUSING MARKET UPDATE | 5Analysis by Dataloft

The spring housing market showed signs of improved consumer sentiment. March house price growth indicated a strong pre-COVID market, with a 2.1% annual increase in the UK. The strongest growth was seen in London and the South West.

It is too early to tell the impact COVID-19 will have on house prices, but they are likely to be protected from major falls as, unlike previous downturns, house prices have been relatively stable. There is a good balance between supply and demand and banks are still lending with fixed mortgage rates at an all-time low based on interest rates of 0.1%.

Annual change in house prices and transactions

Source: dataloft, UKHPI, HMRC

4%

2%

0%

-2%

-4%

-8%

-10%

-6%

JUN 19

OCT 19

AUG 19

JUL 19

NOV 19

DEC 19

JAN 20

FEB 20

MAR 20

SEP 19

APR 19

MAY 19

House prices Transactions

Source: dataloft, ONS, UKHPI March 2020

-1.0%

1.8%3.4%3.8%

YORKSHIRE AND THE HUMBER

CURRENT ANNUAL RATE OF PRICE CHANGE

NORTH EAST

NORTH WEST

NORTHERN IRELAND

2.1%EAST MIDLANDS

1.1%

4.1% 2.0%

1.6%WALES

SOUTH WEST

SOUTH EAST

EAST OF ENGLAND 0.4%WEST MIDLANDS

Below 0%0% – 2.0%2.0% – 4.0%Over 4.0%

1.5%SCOTLAND

4.7%LONDON

NATIONALMARKET CONDITIONS

Bournemouth, Christchurch and Poole

Rushmoor

EastHampshire

Hart

Havant

Basingstokeand Deane

Gosport

Portsmouth

Winchester

aHaa ppmpmpmm shishihirhirshshi eTestValley

Southampton

Eastleigh

Isle ofWight

Fareham

New Forest

Swindon

WiltshireHart

etDorset

6 | SOUTHERN HOUSING MARKET UPDATE

The South West and South East experienced strong annual house price growth in March as a result of improved consumer sentiment following the election result and Brexit clarity. Annual house prices increased by 4.1% in the South West, well above the UK average of 2.1%, while the South East performed broadly in line with the UK at 2%.

House price growth was very varied across the Southern region, ranging from 8.5% in Winchester to -5.1% in Basingstoke and Deane.

REGIONAL ACTIVITYIN THE SOUTHERN REGION

Less than -2.5%-2.5% to 0%0% to 2.5%2.5% to 5.0%Over 5%

Summer 2020

Source: dataloft, ONS, UKHPI March 2020.Contains OS data @Crown copyright and database right 2016.

CURRENT ANNUAL RATE OF PRICE CHANGE

March house price growth indicated a strong pre-COVID market in the UK.

Bournemouth, Christchurch and Poole

Rushmoor

EastHampshire

Hart

Havant

Basingstokeand Deane

Gosport

Portsmouth

Winchester

aHaa ppmpmpmm shishihirhirshshi eTestValley

Southampton

Eastleigh

Isle ofWight

Fareham

New Forest

Swindon

WiltshireHart

etDorset

RANK AVERAGE HOUSE PRICE

123 45678 9101112131415161718

EASTLEIGH

TEST VALLEY

BASINGSTOKE AND DEANE

SWINDON

EAST HAMPSHIRE

HART

WILTSHIRE

BOURNEMOUTH,

CHRISTCHURCH AND POOLE

ISLE OF WIGHT

RUSHMOOR

WINCHESTER

GOSPORT

FAREHAM

HAVANT

SOUTHAMPTON

PORTSMOUTH

NEW FOREST

DORSET

5.2%5.2%5.1%5.0%4.9%4.8%4.6%4.4%

4.4%4.4%4.4%4.3%4.2%4.1%4.0%3.9%3.8%3.7%

£290,453£319,963£291,205£218,551£366,418£402,548£272,870£283,469

£216,133£270,423£441,880£218,452£295,434£259,563£199,660£206,572£339,640£285,051

SOUTHERN HOUSING MARKET UPDATE | 7Analysis by Dataloft

Open for businessThe residential market reopened on the 13th May in England, with estate agents given the green light for viewings, conveyancing and moves. The number of visits to Rightmove on day one demonstrated the extent of pent-up demand. Sales enquiries doubled between Tuesday 12th May and Wednesday 13th May and are only 10% down on a year ago.

The next 12 monthsIt will take time for consumer sentiment to improve and for some people to feel secure in their jobs and ready to re-enter the housing market, but we are already seeing positive signs. For some, several months confined to their homes will have encouraged them to act on long-held dreams of moving. We hope to see the housing market strengthen over the rest of 2020.

Source: dataloft, ONS, UKHPINB Stock levels relate to 2011 Census data. Some areas have seen increased amounts of new development activity since then, which will enhance turnover rates.

Most active housing markets across the region% OF PRIVATE

STOCK TURNOVER

Rightmove had 5.2 million visits on 13th May, up 4% on last year.

Agents surveyed by the RICS in April expected it would take 6 to 9 months to return to pre-COVID transaction levels. 

Eastleigh5.2%private housing annual turnoverSource: dataloft, ONS, UKHPI

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The Guild of Property Professionals 121 Park Lane, Mayfair, London W1K 7AG 020 7629 4141 | parklane@guildproperty.co.uk | guildproperty.co.uk

Analysis by Dataloft

Dataloft is an established property market intelligence company with a long track record of analysing and reporting on the housing market. We are committed to stripping away the mystique of complex data analysis and adding value for clients through interpretation, insight and creativity.

dataloft.co.uk | informpropertyanalysis.com

Disclaimer: This report is produced for general information only. While every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd. Date of publication: June 2020Analysis, editorial, design, graphics and charts by Dataloft.

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