Bath Property Prices Overview After the Covid-19 Pandemic
Thinking of selling your house in Bath – What to expect of the house market in Bath – Bath Property Prices compared to the UK
Trends in property:
Cobb Farr opened in 1989 and have been running as estate agents in Bath for over 30 years. During this time, we have experienced similarly testing times, especially in the recessions of 1989/90 and the crash in 2008/09, both of which affected average property prices in Bath
Using past trends as an indication, in these two periods specifically, history tells us that when output falls and the economy shrinks this can follow with higher unemployment and potentially higher borrowing costs, all resulting in more people being forced to sell their property.
What we do see however, is that periods of falling property prices tend to be short and sharp and can then be followed by a boom. However, if the recession is deeper then it may take a few years for the property market to recover.
Bath prices were affected by these trends, although as per London property, the best areas to live in Bath still retained property values even in the most difficult times.
What will happen to the Bath property prices now?
In some senses this is very difficult to answer. Of course people want to know what will happen to the price of their property in Bath not just next year but over the next 10 years. But they also will want to know what effect the coronavirus pandemic is having and is going to have on the Bath property market.
Quite frankly, the answer to the latter question is that it is too soon to tell. The property market during March almost became suspended in terms of house sales and there is little pricing evidence to go by. This will become clearer once we can assess the economic impact of the lockdown.
Data from Zoopla suggests that Covid-19 has affected the Bath property activity rate, in other words the number of properties being bought and sold. In the UK, enquiries from buyers dropped by 70% since 7 March, say Zoopla.
However, Zoopla also say that this will cause a pent up demand for property and they expect this to increase dramatically once the physical restrictions are eased. Cobb Farr are already experiencing a higher level of enquiries for certain types and styles of property in Bath in the past 2 – 3 weeks compared to 7 weeks ago when lockdown initially began.
The history of bath property prices:
It is useful to look back over the previous decade. The problem with all figures regarding property is that they can be skewered. This is true for the UK as a whole. Where London and the surrounds had a mini boom in the first half of 2010s property in the capital rose by 72% – more than double the average for the UK house price growth of 33.7%, according to figures in a financial report by Thisismoney.co.uk
As a whole this is also true in Bath, where house prices were above average in performance levels, there were inconsistencies at a local level. BA1 and BA2 prices rose far more sharply than some of the outlying areas of Bath.
There were even discrepancies in different styles of property. According to figures from home.co.uk, the average prices of a Bath apartment in January 2009 was £189,000, whereas in January 2020 the same average was £353,000 (+87%).
For detached houses in January 2009 the average price was £302,000, whereas in January 2020 it was £725,000 (+134%), a remarkable difference!
Looking back over the last year (2019) there are again some conflicting reports of what happened to property prices in Bath.
A report by Carter Jonas suggests that prices across the city of Bath grew by 4.1% compared to an overall increase of just 1.2% over the whole of the UK. The report does say however, that whilst the city centre has experienced more interest and higher transaction levels, there were pockets surrounding the city that experienced much lower levels of housing stock and therefore less activity.
In a separate report by home.co.uk it showed that prices for apartments in the last year in Bath rose by 21% whereas prices for detached houses fell by 7%!
From personal experience of properties sold by Cobb Farr we would not necessarily say that either of these reports are entirely accurate. We could identify both apartments and detached homes sold by Cobb Farr in 2019 in and around Bath that contradict these figures entirely.
According to Zoopla, levels of house price growth was around 2% overall across the UK, but again there were major regional differences. What we can say though, is that historically Bath tends to be above average when it comes to regional growth in property prices.
Supply and demand of bath properties:
The recent RICS House Market Survey suggests there was a pattern of less properties coming to the market and a rising demand in the first months of the year and that as a consequence house prices were growing across all regions in the UK as this rise in demand put pressure on supply.
This is the experience from the Cobb Farr perspective. Prior to the Covid-19 lockdown demand for certain types of property in Bath was growing, whilst new instructions were relatively low (down 10% from the same period in 2019).
The RICS also said 22 of their respondents to their survey in February expected house prices to continue to rise. However, it should be pointed out that their survey was carried out before the full impact of the coronavirus became clear.
Of course the Covid-19 lockdown has inhibited activity of property sales in Bath. As already stated, for how long, it is impossible to be sure. This shock is unprecedented but as Zoopla say in their report, they perceive that the government measures will support business as that property pricing levels will eventually largely pick up from where they left off in March.
Factors affecting the decision to sell your property in Bath:
The positive news to all of this for sellers of property in Bath, is that mortgage rates are at their lowest levels, encouraging potential buyers. In addition, many owners of property in Bath have a huge amount of so-called “housing equity” and according to Zoopla this will help absorb any initial impact of any house price falls in Bath.
Zoopla’s Hometrack Valuer says that whilst there is £1.1 billion of outstanding mortgages in the UK, the total value of all UK homes is more than 5 times higher. In the Bath property market this multiplier is more than likely to be far higher we believe.
Also, tougher mortgage regulations in recent years has meant more people having to put down higher deposits, so the likelihood of negative equity is low even if price falls were larger than expected.
Personally, thinking back to 1989/90, I can recall that one of the major problems then was that many Bath home owners had 95% or even 100% mortgages, coupled with the interest rates shooting up to over 10%. This is certainly not the case in today’s scenario.
The outlook for the property market in Bath:
The financial website thisismoney.co.uk reported a shock surge in house prices for lockdown April rising by 0.7% over the month and 3.7% over the past year. As suggested though, these figures we believe should be treated with caution.
What we at Cobb Farr, one of Bath’s leading estate agents, have found though is a continued consistent level of enquiries for property in Bath on a daily basis. Bath is a popular destination with buyers due to factors such as excellent schooling, good communications and lifestyle.
Overseas and London buyers continue to set a demand for high quality property, particularly within 2 – 3 miles from the city centre.
Covid-19 has also caused many families to rethink their lifestyle, hence many enquiries for houses in the Bath area via Cobb Farr in the past few weeks have come from sons or daughters wishing to move close to family.
The level of transaction for property sales in Bath has generally been quite low over the past 2 years due to Brexit and this has definitely led to a shortage of specific types of property in Bath.
There has been a dramatic increase in the building of new homes in Bath in the past 5 years, much of which is on larger similar styled developments of which perhaps there is an oversupply. Many developers that Cobb Farr act for lean towards much more individual high quality property which is what is very much in demand.
When the lockdown restrictions ease, we at Cobb Farr believe there will be a surge in demand for properties in Bath. Pricing is unpredictable as has been discussed, but we believe that levels of Bath property transactions will increase in the next 12 – 24 months.
Contact an estate agent:
If you are thinking of speaking to an estate agent in Bath about selling your property this year, it would be advisable to speak to one who is informed and has previous experience of marketing property in unusual and difficult market conditions.
For any private home owners who are considering selling their home, now is the time we believe to think about gearing up in readiness to sell. At Cobb Farr we will be keeping a very close eye on the developing situation and we are very happy to offer advice on presentation, property valuations and marketing in the meantime.
Please contact Philip Cobb at Cobb Farr on 07771 747860 or firstname.lastname@example.org