It’s been reported that the online property portals, Rightmove, Zoopla et al, are all experiencing a drop-off in searches of almost 10% in the first half of 2022. On the face of it, these falls are compared to a nearly 30% increase seen last year in a demand-fuelled market that was coming out of a pandemic and Brexit hangover, and stoked further by the Stamp Duty holiday. So a re-balancing of these searches is to be expected.

Searches aside, this downturn is mirrored by the UK residential transactions, which HMRC reports as also being down over 55% this June year-on-year, yet also down almost 10% this June vs May 2022. A trend to be warier of perhaps…

This sense of normality returning to the market is backed further still by Propertymark’s latest Housing Market Report, which shows that the average number of viewings per property this year has fallen from 6.2 in April to 4.4 in June – a reduction of 29%.  

So should we panic just yet, as that pent-up demand looks like a bubble on paper, from which the only way is realistically down? With everything that’s going on in the world, there does seem to be a broader holding pattern emerging as homebuyers look to navigate the waters. Balancing the cost of living crisis with general uncertainty of the strategic direction of the country, let alone the cost of borrowing.

For a first-time buyer especially, there is now a not-so-perfect storm and the actual logistics of buying a home are under strain with many lenders now pulling mortgage products, as existing customers look for long-term fixes amid rising payments fuelled by increases in interest rates.

What’s more, despite the falling demand, the supply-shy market has seen property prices rise again for the sixth month in succession, according to the latest Rightmove House Price Index. For many already in a home, now is a time for refurbishment rather than moving, and if the number of skips on drives and scaffolding being erected locally to me are anything to go by, the lack of for-sale boards is also self-evident.

This supply issue is then compounded by rising rental values, making it “increasingly difficult” for aspiring first-time buyers to enter the market at all, let alone consider a new purpose-built rental product. Rightmove shows average monthly rental values being 17% higher than 2 years ago, whilst those looking to buy would need over £2,500 more for a 10% deposit than they would have done two years ago.

Developers caught in the middle

Across the residential sector, we’re seeing mixed reports on demand for new homes that are priced correctly, vs new developments coming to market, predicated on previous financial models. With the increased cost of labour, materials, and delivery, new schemes are oftentimes having to be scrutinised for viability before they even get to market. 

This naturally slows the supply and builds the pricing bubble further. From a marketing standpoint, we have to put ourselves in the mind of the buyer and balance their motivations to move alongside their barriers to entry, and so try to use messaging to counter any underlying concerns.

We also have the rising cost of running a home, which handily, new build property can provide ready-made rebuttals in the form of increased levels of efficiency. We have rising interest rates and mortgage rates, resulting in less entry-level activity from first-time buyers, who would then in turn allow the second-hand market to move too. 

Cue the age-old part exchange or chain breaker opportunities to circumvent this for those higher up the chain, whilst any sort of financial incentive to help deposits for first-time buyers will unfortunately for developers, become increasingly important for differentiation.

Removal of a crutch

With Help to Buy, or help to sell, as some may view it, being removed next March, now is the time for marketers and client sales teams to remove the intravenous drip and look for new ways to create awareness, demand, excitement, and a lasting emotional connection that is not just based on pure rational financials.

As we’ve recently proved, as part of our award-winning Best Residential Campaign for West Cliff Mansions in Bournemouth, selling off-plan, during a pandemic and without the immediate aid of product of Help to Buy is still possible. The 44 apartments were sold within a year off-plan and much of this was down to providing a brand and associated marketing collateral that was born of strategic insight around the customer. So relatable in its approach, distinctive in its execution, and compelling in its messaging, providing relevant and timely comms that helped build brand value and excitement for the scheme.

Shared Ownership is one part of the future fix with Deposit Unlock and First Homes’ impact yet to be ascertained, as they will not be as widely available as Help to Buy was.

Developers are finding themselves competing with a smaller market share and the importance of differentiating against the local second-hand market, let alone new build competition, will be key. So aligning the development brand to the specific needs of the audience and the locality will create standout, as well as sell the specific scheme attributes. 

It’s certainly interesting times that we find ourselves in, yet again, but although history shows that housing finds a way, in terms of new build, it’s no longer guaranteed that if you build it, they will come.

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