Following nearly three months of lockdown we are seeing “light at the end of the tunnel”. As reported last month, on 18th May estate agencies in England reopened and although all expectations were for a cautious start, this appears not to have been the case at the time of writing. Zoopla’s latest data states that sales agreed were up 4% by mid-June, with demand up 46% on March 2020 and supply 15% lower than June 2019. This relative lack of supply is maintaining pricing, with asking prices up 7% year on year and Zoopla’s UK House Price Index up 2.4%. Similar dynamics exist within the lettings market with demand up 60% on March 2020 whilst supply up ‘only’ 36% – leading to a 1.5% increase in the ONS rental index.

Lockdown measures continue to impact the number of housing transactions in the UK and dealing in the Fund remains temporarily suspended, effective 10:30pm on 17th March, whilst its Standing Independent Valuer, CBRE, expresses material valuation uncertainty. CBRE continues valuing the 203 properties in the fund in line with proper market practices, adopting a comparable method of valuation – although given the low transaction volumes there is a dearth of evidence on which to rely, and there currently seems to be more reliance on agent sentiment and asking prices than one would expect within a ‘normal’ market. However, we have been advised by our valuers and letting agent that enquiries to local agents increased markedly in the last week of April, which we assume is people envisaging an imminent end to Lockdown, and implies that the underlying sentiment I talked about in February remains.

From December to the end of February, we have seen a remarkable change in sentiment in the UK residential property market. Four of the five property indices monitored by our benchmark index, LSL Acadata, reported average house prices reached new record highs. According to the latest RICS UK Residential Market Survey, buyer enquiries, agreed sales and new instructions all rose over the month extending a run since December 2019. Near term sales expectations remained positive for the 5th month running.

We have seen a remarkable change in sentiment in the UK residential property market.

According to the latest RICS UK Residential Market Survey, buyer enquiries, agreed sales and new instructions all rose over the month and all respondents remain upbeat on the outlook for sales in the coming year. In that more positive context, the TM home investor fund recorded its second month of upward valuations in the property portfolio. In December, our holdings in Manchester were valued upwards and in January our independent valuer increased valuations on all our units in Wembley. In total we hold 39 units across these two sites totalling 20% of the overall property portfolio.

Furthermore, following positive inflows of new investment into the fund, it will shortly complete on a purchase of 13 three-bedroom new-build houses in Smethwick, West Midlands for c. £2.9 million. Completion is scheduled for the end of February on 11 of these, with the remainder in April or early May. This development is a good fit in terms of our investment strategy – we favour the Midlands as a region, and the development is near a new Super Hospital and a 6-minute train journey to Birmingham New Street Station. We aim to make a further acquisition of up to £2 million in the coming months, and these acquisitions will bring the cash levels back into our target range of 10-15%.

Whilst many commentators are talking about a “Boris Bounce” in the property and financial markets, this will take time to feed through to the property market as deals need to be done and transactions complete. Estimates are that there were 65,500 transactions in December, down 13.2% on the (revised) estimate of 75,500 in November.