2018 property market review

Mike Cole

I’ve traditionally offered up a transparent review of our annual results (within the limitations of competitive data, obviously) by way of assessing how the market in our specific area has performed against the wider picture. I see no reason not to continue this trend…

Selling homes in 2018 

As everyone is well aware, the sales market in the South has taken a hit and Watford/Bushey/Hemel Hempstead were no exception. Our own results showed a drop off in the average house price by a significant 4.8% from £415k to £396k. This was broadly in line with the national results which were between 4 and 5% in the South East, depending on who you listen to. It should be made clear, these are SOLD prices, not asking prices. Rightmove often indicate asking prices have gone up during this period, which may be the case, but if it is, it highlights the challenge in getting sellers to accept their home’s value has gone down. A few months of being overpriced on the market is quite a chastening experience though, and it would be much easier to accept the reality and market the property at the correct value from the get go. Otherwise it means an already stressful process is being dragged out much longer than is necessary.

Cancellation rates were also on the up. The nervous buyers needed very little encouragement to withdraw from a sale and, as ever in the UK system, one withdrawal leads to any number of related sales in the chain collapsing too. Our average over the last few years has held at around 20% (well below industry norms of about 30%) but even ours were up to just under 25% - and we have a dedicated Sales Progression team!

Fees for selling came down too, despite the slowdown which would normally see the reverse effect. The challenge from internet agents have had this impact, although I suspect now that so many of them are failing and going under, we will see the fees creeping back up again. The reality at the current sales levels, coupled with the cancellation rates and protracted transaction times (up to 16 weeks from sale agreed) is that a significant percentage of estate agencies will have lost money in 2018 and be starting 2019 with sales pipelines way down on the norm.

Letting properties in 2018

On the flip side, the lettings market has been extremely buoyant and we agreed 16% more lets across our Group in 2018. We also saw an increasing uptake in our Property Management service as we rose by 22% to 426 managed properties. I put this down to the ever-increasing legislation for landlords who simply dare not risk overseeing the let themselves anymore.  The extra few percent a month to have someone else take on that burden far outweigh the potential punishments (financial and penal) of doing something wrong.

The average monthly rent of a property we let was £1,204. It’ll be interesting to see how that changes with the pending fees ban.

Our income from lettings was only just behind the sales income and next year, I expect it to overtake sales. In part this is down to the slowdown in the sales market, but also based on our investment and commitment to lettings infrastructure over the last 5 or 6 years that is now reaping rewards. That said, the potential impact of the tenant fee ban could literally wipe away the profit in one foul swoop and this is currently a major concern for our industry. It’s pretty obvious that if most agents are losing money on sales and are about to lose money on lettings, something has to give…

New Homes sales in 2018

We had our record number of New Homes move ins, with 81 completions, placing us miles ahead in this local market. However, far from being able to be complacent, the drop off in sales rates for these properties in the back half of the year was very significant. We are having to work very hard with our developer clients to keep the proposition attractive, with very few investors taking the plunge. We do have over a dozen new developments launching in 2019 though so plenty for buyers to be looking out for in the months ahead.

Land sales in 2018 

We had a bumper year for new land deals with 13 new land sales agreed of all shapes and sizes, and values from £500k to our largest yet at £10m. We also have at least that many more developments in discussion stages and expect 2019, in terms of sites agreed, to at the very least match last year’s performance. If you do have a plot of any size that you’d like to have assessed to maximise its potential, please email our brilliant Land Director Tom McBride - tom.mcbride@imagine-group.co.uk in complete confidence for a discussion on the options available to you.

What will happen in 2019?

Going forward I don’t see much changing for the better in the sales market until the Brexit scenario is resolved. I know we’re like many other industries in this regard.

Lettings will continue to thrive; but the impact of Government attacks on landlord’s finances and the tenant fees ban on agents has to be serious. My suspicion of what has to give is the cost of rent – in which case the very people the Government are trying to support at the expense of agents and landlords are likely to also feel the pain very soon too.  It makes no sense to me at all, but maybe there is a method to this madness I’m yet to be enlightened of.

Whatever your property hopes and aspirations are for 2019, we’d be delighted to be chosen as your professional to assist wherever we can. Whether BUYING, SELLING, LETTING, RENTING, CONVEYANCING, MORTGAGES, PROPERTY MANAGEMENT, LAND OR NEW HOMES, we have some great people waiting for your call. 

Sincere thanks for all the business in 2018 and wishing you all a healthy and prosperous 2019.