What’s really going in UK/London property?; How much do bad photos affect a sale?; Purplebricks looking for experienced agent (+ve); Countrywide ends acquisitions (-ve); proptech & more

Some pointers of what’s going on in the UK rental and sales market…

What’s going in UK/London property? usual Brexit noise but overall property market seems resilient, London sales were cooling before vote and have continued to but are fine in lettings

Lots of noise on the property market so here’s a comment peering through the latest. The sales director of Chestertons is in the CityAM this morning saying press reporting on the residential property market since Brexit has been ‘hysterical’. He points to one newspaper’s piece on sellers ‘slashing’ prices post Brexit didn’t stand up as the properties had seen incremental asking price cuts over a year with the majority coming before the vote. He suggests buying agents are using this as a reason to try to push for price reductions (as is their job) but the market is resilient and demand still outstrips supply, especially in London. One buying agent is also quoted that nobody knows really what’s going on but London was clearly cooling before Brexit due to SDLT changes and that has continued. London price cuts did jump 163% in the 2 weeks after the vote (source: LonRes) but, in turn, Knight Frank has said that was just sellers receiving a wakeup call from the vote to make ‘long overdue’ reductions to asking prices. Anecdotally that seems right – sellers didn’t want to face up to the fact it’s now about 3%-4% more expensive to buy a home in the UK for anything over £1m and 6% if it’s a second one and buyers were not willing/able to pay that. Knight Frank continued to say London viewings were up 17% in June and the SDLT changes the main reason for price negotiations – it thinks most offers now ask for a 10% discount on the asking price. Similarly in lettings, London lettings prices fell nearly 4% at KF (another London agent – Portico – said 2% with some actually bright spots in prime central London) but KF viewings were up 16% and actual tenancies up 3%. Portico also said outside of London, rents were flat. Spareroom.com reported that there are still 3 applicants to every available room in London but has seen only 1% rental price growth with national rents about stable (West Midlands and Birmingham declines, certain cities 10%+ growth). So the lettings market seems healthy despite the settling of rent price growth. See next comment for transactions…


What’s going on in UK transactions? Board supplier says normal season, except in London; may have increased supply in July

Agency Express, the largest estate agency board specialist in the UK, says that Nationwide in July For Sale boards dropped 15% and Sold 9% but these are normal trends as the industry moves from the spring selling season into summer. London saw a slightly unusual move with For Sale boards down 50% and Sold 20%. HouseSimple says the number of properties for sale nationwide were up 3% in July and 14% in London with three boroughs +40% (by looking at the portals) so it looks like transactions are recovering. Also notable for London is that Chinese property portal, Juwai, says interest in British property has jumped 30%-40% since Brexit and notes these are long-term financial investors with a high level of confidence in UK property. We’ll get a better view on transactions in September when the Autumn selling season starts. We may see some reduction in transaction volumes but there’s no sign of a crash at the moment. So, overall, the property market is keeping calm and carrying on even if the commentators getting most airtime are not.


Unscientific test suggests professional photos generate 6 times the leads as amateur pictures (are you listening online agents?)

Online agent Upad and interiors firm David Phillips did a quick experiment listing the same property on Rightmove with professional shot photos and those from an iPhone. It resulted in 6x as many enquiries for the professional photo ad as the amateur. An unscientific sample of 1 but it plays into my prejudice- stretched, dark, amateur photos have a real world cost of £’000s and are a major drag on the growth of online-only agents.


And there’s some latest news on Purplebricks and Countrywide….


Purplebricks: LPE recruitment drive but only apply if you have 18 months+ experience

A telling advert from a recruitment agency is looking to recruit “Estate Agents Nationwide” on behalf of the UK’s “third largest estate agent” that spends “£1.3m per month on national advertising” and you can “run your own business… with central sales support at zero cost to you” ie it’s Purplebricks. 160 locations are listed where its recruiting which is inline with the growth target of 330 LPEs by March from 245 at the half year.  Applicants need more than 18 months estate agency experience and at least a year in valuations (it’s clear about that “I stress again experience is absolutely essential for this role”). PB sees enough of a pool in this area rather than need to look to novices. Salary is given as £45k pa but “many” earn in excess of £95k. 24 people have applied in the first 3 days of it being posted and it has received a negative (and snarky) response from estate agency forums disbelieving the wages, expertise of PB’s LPEs and the ability to close deals at good prices. That’s not a surprise and its true PB will need to demonstrate ability to close transactions at good prices if its growth is to continue.


Countrywide CEO: no more acquisitions this year

CEO Alison Platt said in an interview that there will “almost certainly” be no more acquisitions this year. The last, in March, was a letting agent in Oxford. “acquisitions remain a key route in the longer term for doubling the groups’ business, especially but not exclusively in lettings”. If earnings in the traditional industry are on a downward trend, returns from acquisitions are going to be difficult to achieve. Diversifying into lettings – still dominated by the traditionals at the moment – makes more sense so this isn’t a surprise. The difference in the current investment profile between Countrywide and Purplebricks couldn’t be more stark.


Build-to-rent projects getting headlines: seems like slow growth of the sector

Moorfield and Glenbrook have announced their 2nd build-to-rent project together with a 232-unit scheme in Manchester set to complete in 2018. The first was a 240-unit in Liverpool which is now fully let apparently. George Osbourne was very supportive of the PRS sector and both Foxtons and Inland Homes have focussed on growing in the industry recently. There are few consolidated figures but it seems the sector is seeing some growth if no revolution. It’s interesting that in the latest English Housing Survey private sector tenants were more satisfied with their accommodation than the social-rented sector and average renting periods had increased to four years.


Investment in PropTech incubator grows a bit, gains access to N America

Pi Labs has invested in 15 proptech startups since launch in 2014. It’s not partnered with a Canadian PRs firm (Bosa) to increase the funds available to £100,000 – tiny in the scheme of things but they only take small stakes – but more importantly to give those techs access to the N American market. Pi Labs expects to invest in a further 10 start ups this year. It’s portfolio is highly diverse – from apps to find off market deals, including land, to smart thermostats, big data analysis, commercial property and more than a few for landlord-tenant interaction. Nice idea but it needs to ramp up with more partnerships and investment funds if it’s going to have a big effect.


Replace SDLT with CGT on primary homes?

It’s only a few voices at the moment but a developer has called for stamp duty to be abolished as a transaction tax and replaced with CGT on primary homes. It’s also something the TaxPayers Alliance has called for. It makes sense that SDLT reduces movement, but isn’t really gaining prominence with the general population. The main issues with the potential change are the flows to the treasury coffers – CGT rates on primary homes would have to be huge to compensate for loss of SDLT and thereby deter movers in any case, offsetting – a transaction tax isn’t so easy to offset – and foreign / cash purchasers becoming even more advantaged vs UK homeowners.


Belvoir shows how fast it’s grown

Belvoir celebrates 20-years since its first ever franchise (which was in Scotland) today. That means that it has added a franchise every 3.5 weeks on average since then. Not bad but considering it has nearly doubled since 2014 it shows how momentum has grown.


That’s the latest for today.


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