Out of the fridge
With the Government announcement on Tuesday evening that estate agents can return to work and start viewings, there will be a hope from tradesmen to those serving the luxury goods market, that this will kick-start some form of a return to “normal”. This is a tentative step in the right direction at least.
The lockdown had placed an estimated 450,000 buyers and tenants effectively into the proverbial fridge; chilling, and in some cases festering, as a result of the inability to move or work effectively – by legal decree. Buyers who had planned to move after the 3 years of Brexit negotiations – with low interest rates making moving even more palatable – found themselves in a competitive market for limited quality stock. Some managed to move in Q1 2020 prior to lockdown but there remained £82 billion of property sales transactions that Zoopla says had been put on hold in lawyers hands and which hopefully will now finally start to transact. While the shackles of the lockdown are gently removed, the impact of the full stall of the last 7 weeks are hard to fully comprehend and won’t be known for some time yet.
The deep freeze many journalists reported in the property market was not so much the case in prime central London as we know that proactive lawyers were working hard, adopting Corona clauses where necessary, to keep their clients moving dreams alive. Lonres.com released their May 2020 research showing that in London, while the figures certainly weren’t good reading, exchanges of contracts between mid-March and the end of April had only seen a 35% drop in numbers compared to the same period in 2019. The pipeline of transactions agreed in January and February, and hailed by some companies as the biggest quantity of agreed sales seen in terms of volume and value since before the financial crash of 2008, has at least enabled some estate agencies to survive through the lockdown with some decent quantum of exchanges carrying them through. That combined with the Government backed furlough scheme will have, to date anyway, taken the sting out of the tail of some of the financial headache that may yet await. Any black hole in terms of existing business will inevitably put huge pressure on estate agents and this is now the time for us all to behave responsibly; ensuring high levels of integrity and best advice for our clients remains our premier priority. Leaders have a responsibility to manage and it will be difficult to control inexperienced agents advising clients to keep calm and not take the first low offer received when their targets, pay and future employment may be reliant on that deal being agreed.
I was recently handed an old Boardroom Magazine from August 1990; promising on the front cover “news, views & a taste of the good life”. What struck me was not just the incredibly good value of the properties listed in the advertising sections but more the number of estate agency firms who were no longer operating – ghosts of the past.
This was a reminder of how quickly times move on, trends change and with technology I believe that this has increased the speed of change. Decisions by companies in these trying times are going to be critical and the sense of purpose for how they operate in the future will continue to be tested.
As estate agents return to work, opening some offices “by appointment”, management decisions about which staff can return to work, and unfortunately those who may yet be made redundant, will now become the tightrope walk of truth. Carrying large overheads in shop rent, increasing staff costs, marketing costs and determining projections on what new listings to release into an uncertain market is a challenge in an environment of uncertainty.
Lonres.com confirmed that in prime central London, listings were down between mid- March to end April by 72% compared to the then-considered low volumes during the same period in 2019, so there are slim pickings for agents to be able to compare what looks great versus what looks bad, when it comes to advising clients on “value”. Many brave research teams have been inconclusively best-guessing projections for the prime central London and national property markets, but no-one really knows how this un-lockdown will go. Indeed, some research teams have said they are unable to project with incomplete data in this extraordinary vacuum of lost trade. Pressure to agree to launch with concerned vendors and guessing when buyers will be confidently back in the market, is a recipe for short-sighted decisions and long-term complications in company finances. Companies with low overheads, strong balance sheets and experienced agents are the go-to teams.
For me, managing client expectations and interests are done with cautious optimism. Having just agreed my first viewing, taking place this afternoon on a lovely first floor flat in Rutland Gate in Knightsbridge, I am certain that the human instinct to focus on quality products, with a continued flight to quality, will forever be a human behavioural need. Common sense must prevail in these unusual times; which is why at The London Broker now we are inviting potential buyers to self-certify themselves, in order to provide confidence to our vendors that any viewings are worthwhile; in so doing and to the best of our abilities, to know that we are dealing with responsible individuals who will behave sensibly, taking necessary PPE precautions, whilst looking at our listings.
So now will be the moment of truth to see whether the current travel complications, quarantine rules and social-distancing etiquette will continue to delay the return of the short-lived positivity experienced in the January and February residential marketplace. With lessons hopefully learnt about sharing and community, through the shared experiences witnessed & in supporting the amazing work of the NHS and essential services, helping one another is a gift that costs little but can help so many. The responsibility on estate agents to start to get the country moving again must be done with care and thought, making sure we protect the spirit of a nation bowed by this dreadful disease.
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