We are now at the mid-point between the re-opening of the property market and the end of the year and the surge of New Instructions & Sales Agreed continues, driving momentum significantly above 2019 norms. Whilst there is lag in Exchanges as a by-product of lockdown the charts below highlight significant optimism.

New Instructions in 2020

From our Client Briefing in July (Issue 29 – The Cost of Covid-19 – Part 1), we had measured a cost of Covid to the volume of properties coming to the market For Sale. To recap, this is based on our assumptions of determining an average volume of instructions both pre and post Covid to then calculate an expected volume of instructions, and comparing this against the actual observed volume of instructions during the lull weeks, during and following lockdown of the estate agency industry. For new instructions, this lull was between 16th March 2020 to 16th June 2020, and in this time, we calculated a 285,000 deficit of instructions compared to expected levels without the Covid disruption

As you can see in the above chart, instructions have recovered to pre-lockdown levels week commencing 15th June 2020, and in the more recent weeks it has continued at inflated volumes.

The above chart shows the volume of sale stock coming to the market in 2020 and how this compares to 2019. Despite some volatility in weeks 15-23 for 2019, nationwide levels of instructions are relatively steady around 35,000 per week.

Initially instructions in 2020 followed a similar pattern to 2019 with a slight increase which was previously credited as the “Boris Bounce”. Then during the lockdown period instructions fell through the floor as I am sure is familiar to us all now. However what peaks our interest now is the inflated levels of instructions that we are observing since w/c 15th June.

In the last 11 weeks (commencing week 25) we have seen 115,000 more instructions in 2020 compared to the same period in 2019. Now this does not compare to the 285,000 lost instructions during the lockdown lull, however this is a significant resurgence and with the remaining 4 months left in the year it is possible that the impact Covid has had on instructions may be significantly smaller than originally forecasted.

Sales Agreed in 2020

Within the July Client Briefing we had measured a cost of Covid to the volume of sales agreed. To recap, this is based on our assumptions of determining an average volume of sales agreed both pre and post Covid to then calculate an expected volume of sales agreed, and comparing this against the actual observed volume of sales agreed during the lull weeks, during and following lockdown of the estate agency industry. For sales agreed, this lull was between 16th March 2020 to 16th June 2020, and in this time, we calculated a 238,000 deficit of sales agreed compared to expected levels without the Covid disruption.

As you can see in the above chart, sales agreed have also recovered to pre-lockdown levels week commencing 15th June 2020, and in the more recent weeks it has also continued at inflated volumes.

The above chart shows the volume of sales agreed in 2020 and how this compares to 2019. In 2019, nationwide levels of sales agreed are relatively steady around 35,000 per week.

Early 2020 sales agreed levels show inflated levels above 2019 pre-lockdown. Then during the lockdown period sales agreed dropped significantly. In an identical fashion to what we have already seen with instructions, sales agreed began to rise following the re-opening of the estate agency market and have restored back to pre-lockdown levels in w/c 15th June.

In the last 11 weeks (commencing week 25) we have seen 118,000 more sales agreed in 2020 compared to the same period in 2019. Again, this does not compare to the deficit of 238,000 lost during the lockdown lull, however this is an impactful start and with the remaining 4 months left in the year it is possible that the impact Covid has had on sales agreed may also be significantly smaller than originally forecasted.

Exchanges in 2020

From the July Client Briefing we had measured a cost of Covid to the volume of property exchanges. To recap, this is based on our assumptions of determining an average volume of exchanges both pre and post Covid to then calculate an expected volume of exchanges, and comparing this against the actual observed volume of exchanges during the lull weeks, during and following lockdown of the estate agency industry. For exchanges, this lull took more of a “v” shape and it was quick to bounce back up to norms, and we had defined the lull to be between 16th March 2020 to 2nd June 2020, and in this time, we calculated a 59,000 deficit of exchanges compared to expected levels without the Covid disruption.

As you can see in the above chart, exchanges have recovered to pre-lockdown levels quicker than instructions and sales agreed in week commencing 1st June 2020. However, unlike instructions and sales agreed, exchanges have actually receded a second time, and in the last 3 weeks it is almost at the same levels as it was during lockdown. This also goes against seasonality trends where exchanges usually increase in the summer months. In reality, this lull in exchanges that we are seeing in the months following lockdown is due to the behaviour we have already mentioned. The first lull during lockdown was caused by a nationwide pause while solicitors and homebuyers were uncertain how to progress with a property purchase during a nationwide lockdown. This second lull is caused by the supply of property purchases through the funnel of a property transaction. With the average time to complete on a property transaction at 3-4 months, the disruption of sales agreed in March-May has cascaded to a disruption in exchanges in Q3 2020

The above chart shows the volume of exchanges in 2020 and how this compares to 2019. In 2019, nationwide levels of exchanges are not smooth, however there is a definite increase in exchanged activity from the summer months through to the end of the year which is a common trend historically.

Since lockdown on week 12, exchanges have been tracking at lower levels than 2019 and except for week 23 (w/c 1st June 2020) it has remained at lower levels. With the inflated volume of sales agreed we have observed since 16th June, we expect exchanges to reflect this and show large volumes of property exchanges as these sales agreed properties cascade through to property completions, and with the 3-4 month lag between sales agreed to completion we would expect this to show before the end of the year.

In the last 11 weeks (commencing week 23) we have seen a deficit of 55,000 exchanges in 2020 compared to the same period in 2019. This is in addition to the 59,000 deficit we saw during lockdown and so exchanges are down 114,000 between these two periods.

Source: TwentyCi