New SCSI Special Covid-19 Residential Report24 August 2020
The Key Findings:
Two thirds of estate agents say property values have remained unchanged compared to pre-Covid-19
73% of agents said the level of enquiries had increased or remained the same while the corresponding figure for viewing was 63%
Agents say 10% of property sales were renegotiated due to Covid-19 – the average price reduction was 3%
Findings indicate 8% of tenants failed to pay their monthly rent as a result of Covid
“Survey shows resilience of the market, but the outlook remains challenging”
Monday 24th August 2020. A new survey of chartered estate agents has found that Covid-19 has had little impact on property values to date and that activity levels are now at higher levels than they were prior to the economic lockdown.
Sixty-six per-cent of agents reported that property values had remained unchanged compared to pre-Covid-19 times with 28% reporting that values had declined and 6% saying they had increased. This largely supports figures published by the CSO last week showing a 0.3% increase in property values nationally to June 2020.
The Society of Chartered Surveyors Ireland carried out the survey of over 260 agents nationwide to measure the true impact of Covid-19 on activities across the property sector.
Three out of four agents (73%) reported that purchase enquiries had increased or remained the same compared to pre-Covid-19 while 63% of respondents said there had been an increase or similar number of property viewings.
Fifty-six per-cent of agents said the level of property sale appraisals was up or similar to pre-Covid-19
However, 74% of agents said they had experienced at least one failed transaction as a result of Covid-19 while the survey found that overall, 12% of sales had failed as a result of the virus.
While the residential rent sector has largely been protected from the worst impacts of the virus by a variety of income and rental supports it is clear many tenants – and landlords – are finding it a challenge to meet their financial obligations. The survey found that on average 8% of tenants had not met their monthly rent obligations due to Covid-19 and that just over a third of this group had provided satisfactory evidence of inability to pay to their landlord.
SCSI Vice President and Cork based agent TJ Cronin said the findings underlined the resilience and the adaptability of the property sector, but he warned that the outlook remained challenging.
“The figures reflect what agents have been saying on the ground since the reopening of property markets in early June. Activity levels have been brisk due to pent-up demand, especially in the sales market. Confidence within the house purchasing market remains strong, especially among those who have been unaffected financially by Covid-19 or those that had finances in place.”
“Sixty per-cent of agents say the reason buyers followed through on their purchases during the pandemic was because they found a property which matched their needs while the other reasons were not allowing the loan offer to lapse (25%) and reluctance to continue paying rent (10%).”
“However new mortgage approvals and drawdowns are down, and the salaries of home purchasers are likely to be impacted as a result of Covid-19. As rental supports are reduced it is likely that the figures for rent arrears will grow. It’s also likely that the rental market for young professionals and students will be especially impacted because of Covid although as with house sales, the market will be underpinned by the well documented lack of supply” Cronin said.
10% of properties renegotiated due to Covid-19
Renegotiations are a regular feature of the property sales market. Reasons can include an unsatisfactory building survey, boundary irregularities, a change in the financial circumstances of the purchaser or a similar property coming to the market in the same area before contracts are signed.
This survey indicate one in ten property sales were renegotiated with the newly renegotiated price amounting to a 3% reduction on average on the original sale agreed figure.
TJ Cronin said over half of respondents (54%) experienced renegotiations of sales due to Covid-19.
“Clearly Covid-19 introduces a range of new variables to property purchasing, chief among them right now being the mortgage approval process. While we don’t have accurate figures for the total number of renegotiated sales, we think it’s fair to conclude that due to the knock-on effects of Covid-19 there has been an increase in the region of 10% in renegotiated sales.”
Cronin believes the dramatic rise in home working has made home ownership even more attractive in the post-Covid-19 era. “One of the trends we are seeing is increased interest in out of town properties which can facilitate home working. Some people may be renting a city apartment or sharing a house and they realise it is just not fit for purpose in the post Covid era. While this trend is not as pronounced as it is in the UK at this point, it is one to watch for the future.”
The SCSI said one of the takeaways from the lockdown was the extent to which agents, buyers and sellers had embraced the use of online viewing tools and bidding technology. While the use of technology was forging ahead in some areas the Society pointed out that the continued use of paper-based conveyances was totally at odds with this trend.
“According to an SCSI survey earlier this year the average time for a house sale to close was five and a half months. We really need to speed up this process, drop the current reliance on a paper trail and introduce electronic conveyancing or e-conveyancing as a matter of urgency” Cronin concluded.
Note to Editor
The SCSI’s Covid-19 online residential survey was conducted to assess the impact of the Covid-19 restrictions on the residential sales and rental market. The survey was completed by 268 chartered agents nationwide between June 19 and July 3, 2020.
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