Not your typical Midsummer Druid, and perhaps not your typical Midsummer Market…
So, it is probably time to pick up, and then quickly discard, the druidical theme first alighted upon in the dark, dank days of December at the time of the Winter Solstice. Because we now head toward the Summer Solstice, the longest day, the shortest night, roughly fifteen and nine hours long respectively. We’re reaching the climax of the year in a Druidical sense, and perhaps a property market sense too?
As has been noted recently in these missives, the local market has been on fire since lockdown ended.
This past three months has seen the (un)welcome return (depending on which side of the market fence you reside) of our old friend the sealed bid.
Bear with me whilst I list some year-on-year statistical increases for the past six weeks;
New buyer registrations – up 112%
Viewings – up 115%
New instructions – up 78%
Number of sealed bids – up 82%
Average percentage of asking price achieved – 100.27% (record, long term average 98.5%)
However…
Deals agreed – up only 36%
And the figures behind these figures, are all stand-alone records for our 12 years of trading!
If you dig even further behind the figures behind the figures, you might ask yourself (well I did, but I’m quite nerdy); ‘broadly speaking I’m seeing a 100% increase in stock levels, buyer levels, and activity, but why am I not seeing a commensurate increase in deals and fees?’ (and trust me as an owner of the business, I really, really wanted to know the answer to that one).
So, let’s drift sideways for a second from the grey science of statistics to the much more exciting, (could we say rather mauve?) science of behavioural economics (to my mind the only true branch of economics, I mean how can you monitor and explain matters economic if you don’t factor in the variables of human behaviour?).
Let us confer with Kahneman, Gladwell, Dubner & Levitt, Thaler, and my current favourite Martin-Fagg…as their mauve insights might explain things – because, whisper it quietly, (and trust me, I’m an estate agent) but estate agency can be a touch grey at times.
Now, we know that the market is excellent for the following reasons:
People move in and out of Wandsworth driven by familial imperatives; marriage, birth, schooling, divorce, and from flats to houses, to a bigger house, or down to flats again, or back out to the country from whence they originally came. If you like, they make moves out of necessity.
When times are uncertain, they move less, they stay put, they make do and mend, they squish and squeeze. They certainly still move, but in fewer numbers.
A brief resume of events:
2016-2020 – Four years of Brexit nonsense = four years of uncertainty. Four years of making and mending. Four years of constrained market.
(NB: In the background the fine denizens of WW are still, marrying, breeding, divorcing, and ageing).
Dec 2019 – election win by Conservatives with good majority = we have direction for good or ill. We have Certainty. We are leaving.
Ergo sum, Dec 2019 – Release of four years’ worth of newlyweds, children, divorcees, and older people into the market.
Dec 2019 – Mar 2020 Market mayhem.
Mar 2020 – Covid…you thought that the Brexit market was bad?
May 13th 2020 – End of lockdown for Estate Agents, they are released back into the community.
May – November 2020 – market mayhem as hordes of screaming lovers, toddlers, middle-aged Tinderers and pensioners are re-released into the market.
March 2021 – Today – ditto…
(Hang on a minute, I thought that this was about sealed bids? Ed.)
Yup, hang on, almost there.
Here come the bids…
Because as times are still very uncertain (remember the “irreversible roadmap out of lockdown” anyone?) and so, if I’m a motivated newlywed/divorcee/new parent/down-sizing Oldie, I’m going to make damn sure that I buy something that I know I will be able to sell, and sell well, should the economic crap hit the cooler; I’m going to buy the best in class. But so is everyone else…
For example, two weeks ago, we launched a best-in-class house – spanked, catchment, South-facing garden, just off Northcote Road and wider than the average. We priced it at just about the top-end of the £/sqft feasibility range at £892 (average 2020 £871) – high enough to make a statement of intent but not high enough to scare people off. Within two weeks of being on the market, we had ten people wanting to buy it and so we went to a sealed bid and the house was agreed well over asking at £938/sqft. To a 100% cash buyer.
And so, many people competing for the same property, therefore sealed bids, therefore, record percentage of asking price achieved across the board, THEREFORE, despite 100% more buyers, doing 100% more viewings in a market with 78% more stock, only a 35% increase in revenue.
Because a very, very large proportion of them are all after the same thing, a sound, copper-bottomed, property purchase.
And the moral of the story? Hmmmmm, dunno…what about, don’t buy Bitcoin, buy Bricks, (and mortar, in Wandsworth)?