The ESPC Property Show Podcast is back!

Megan

Hello and welcome back to season two of the ESPC property show with me, Megan.

Paul

And it's me, Paul. I've forgotten who I am, it's been so long.

Megan

I know it does feel like ages.  Our last official podcast episode went out on the 1st of June and it is now August.

Paul

We have had the decorators in.

Megan

We're in the same studio, but it just looks a little bit different.

Paul

We've upped our game or our podcast game has been upped.

Megan

Yes. And we're here to stay.

Paul

Yes, absolutely. Like as I said in my LinkedIn post unlike some high profile duos, podcast duos, one with the name Megan actually.

Megan

We're really excited for this new series, but we thought we would kick off after we had some feedback from some of our listeners knows that they really wanted to have a bit more industry market updates.

Paul

Yeah, a bit of a flavour about what's been going on and we don't want this to dominate every episode, but I think if we can sort of touch the pulse of the property market as we go, we will. And we felt today was appropriate to do that.

Megan

Especially since we've been away for quite a few months now, you will have seen that in the podcast feed we did have our ESPC Live event. So if you've been listening, you will have gotten a flavour of what was happening in the first six months of the year. But we thought we would just chat over that summer period in case you've been away on your holidays and you're thinking about getting back into looking into what's going on in the property market.

Paul

And we see that, I mean there is a bit of seasonality and I think since COVID we think it's a really good thing. People are taking the holidays, they're switching off. They're not obsessing about the property market, but now you know children are back at school.

Megan

Yeah, it's time to start looking for properties again. So, Paul, I want to just kick off if you could give us a summary of the last few months.

Paul

Yeah, let's start with then a review of what we call it the summer market and you know this is despite the 14th consecutive interest rate interest rate rise, the market's been pretty stable. It's held up very well. If we look at the last House Price Report, which is May to July, we saw a 0.4% increase in house values. It's been up a little. It's been down a little. But generally what we're seeing is a stable market in terms of house values, which is completely contrary to maybe what the headlines have been saying and certainly the predictions late last year were saying. So that's encouraging. I think it's encouraging for buyers and sellers and we'll come to that. The premium that's being paid is come down a little from last year to 103.8% now. So again, to be expected, there's more choice out there. There's almost double the amount of properties to choose from than it was this time last year. So again, more choice good for first time buyers.

And I think we are returning to levels which are around 2019. We say this every time we do a House Price Report video, the frenzy of 2021 and 22 is behind us now. Levels of buying it and selling and listing are back to those sort of levels, but the median time to sell, so time it takes from coming on the market to achieving a buyer for the property, sits at 19 days.

Megan

Which is still really quick.

Paul

It's really quick, if you look at the average across the UK that is quick and you're going to find in rest UK it's 2-3 months even longer. So just shows you we have a really healthy market and one of the things we were just talking about is that we've not seen a crash. And we're putting together a piece which we'll have out in in the next week or so, talking about what's the difference between the market now and the market that we saw in 2008 and 2009 when across the UK there was a crash, have to say, even during that market, Edinburgh was tremendously resilient and we didn't really see prices significantly impacted. But you know, as a sort of very brief summary, there's been no credit crunch this time. You can still go out there and get a 100% mortgage. I mean back in 2008 and 2009, I remember it very well. You literally needed 25% deposit in most cases to get a mortgage and it came from nowhere so suddenly you had your 5% we didn't have your extra 20% and that's why the market in many ways ground to a halt. So we've not seen that with the variability of mortgages out there. And the other thing is that as a result of what was reckless lending in 2008, 2005, 2006, 2007 when people could have got 110% mortgages, that would be nice. So you got your house and you got a mortgage for all your fixtures and fittings and your carpets. There was argument that there was some reckless lending. People could self-certify on their income, etc. Things since then have got a lot tighter. So I don't think we've seen that reckless lending since 2009 and as a consequence, we've not seen the repossessions that we saw back then. Which again means there's not a flood of properties coming to the market. So we still have this balance between buyers and sellers, so lots of reasons why it's different from that market then and lots of reasons why I believe we won't see a significant house price readjustment, certainly in the areas that we operate in. The other thing we should mention, and again we've spoken about this, is rent inflation. Edinburgh, the highest in the UK in April this year. The shortage of property, I mean, we talked to our lettings team earlier and they're saying that as soon as anything comes on the market, there's 25-30 people enquiring on that day. And by the end of the day, it's let. And so whilst that sustains, people are always going to look at buying a property as an another alternative, and they should, it's weighing up the pros and cons.

Megan

I mean what that means is for every rental property there is then about 28-29 unhoused tenants.

Paul

It makes you wonder where the where people go. I mean, certainly Shelter have spoken about the housing crisis. You hear it from Homes for Scotland, the body for new builds and we'll probably be having both of them on the show, I think that'd be really good. You know, just talk about the housing market. It's clear we need to build more homes and we need to act fast on that really in my view.

Megan

Yeah. And in terms of, I don't know if you want to explain a little bit about this, Paul. I'm trying to been chatting to people over the summer as well like friends, family and trying to explain that we've seen this rise in average rent in Scotland, which is matching that or coming in close second to London despite having these rent caps in place, do you want to talk about why that's maybe happened?

Paul

Yeah absolutely. And you know, just in the old days, if the housing market for residential sales was doing well, the letting market was suffering. And you know vice versa. But we're seeing rising house prices and rising rents. And why are we seeing that? I think yes, there is a rent cap in place. I think what's happened there is there's been many a landlord that's exited from the market who've decided that's just one more piece of legislation too many. But what is clear is that when the properties become vacant and that gives you the opportunity then to review the rent to, to ask what you want because of the supply and demand imbalance, because many landlords have left the market, it means when a property becomes available to rent, the landlord has been able to put the rent up. Not all landlords are doing this and you know not all landlords are bad, not all landlords are absolutely out of profiteer here. Many didn't put up rents during the COVID period. I know here at ESPC we had many a landlord that cut some slack for those people that were on furlough, so they made the concession on the rent. But yes, I think what we're seeing is when the opportunity arises and the property becomes vacant, we are seeing rents rise significantly because I think the landlord's sort of view on that is well, this might be my only opportunity for a while because once a tenant comes in the cap is going to kick in. So I'll get the increase in now whilst I can. And so in some ways, the it's the law of the unintended consequences of these government decisions I think have impacted quite negatively on the market. I don't think it's working for landlords or tenants unfortunately.

Megan

No, I agree. And I think you're right. It's what we're seeing in both markets, the rental and the residential purchasing market, that lack of supply is what it's increasing demand.

Paul

I suppose the good thing is there is absolutely hope for first time buyers out there, you know and we passionately believe we'd like to see more first time buyers on the ladder. But what we are seeing is there are 100% mortgages available for first time buyers. So you don't need a deposit. If you've been in rented property and you've kept up with that rent, that can be seen as your credit-worthiness, and again, you need to talk to a mortgage expert about that, but there are those mortgages available. We're also seeing a real rise in the amount of fixed price properties on ESPC. Which is great because the thing which plagued the market as we know is that poor old first time buyers had to find the mortgage deposit and then had to find their premium which was at 108% at one point last year to successfully win the property at closing date whereas now its fixed price which means that's my price, that's what I want for it. And we've even had some of our member firms come on here and say, well, it's a fixed price, but make an offer. So there's that as well. So more choice, double the amount of properties for sale. So I think that's a good thing.

Megan

And then speaking about first time buyers, we've often referred to this kind of double deposit that we've heard thrown around a lot that first time buyers need the deposit to get the mortgage but they also need the bidding power of that offers over. So it's not necessarily that now they're going to need less capital and less cash up front. It's just that they have to use that in a different way, maybe less goes on the premium more goes on the deposit and that's how it works.

Paul

Yeah, and hopefully a bit leftover for carpets and curtains and things.

Megan

Yeah, exactly.

Paul

I don't say that flippantly, because I think it's hard and we all found it hard getting on that ladder. I'll be honest, I think it was easier back in my day than it is these days and I know you recently bought. And I think we need to find a way that we can get more people on the ladder. And I know at ESPC we want to talk to government about that, there were some great schemes the other year, which I think helped and we'd like to see reintroductions of some of those measures, because I think it's important that we have a first time buyers market.

Megan

Yeah. And obviously another thing that you've already touched upon from over the summer was the continuous rising interest rates, which we won't go into too much because we've got an episode coming up with our mortgages team who will explain that in a bit more depth. But we are starting to see some lenders reduce their rates and inflation is now coming down.

Paul

Inflation is coming down, wage inflation is still a concern, Bank of England said that. And I think if you read into the Bank of England last statement, I think really what they're saying is that they'll need to go harder for longer than maybe most of us anticipate or wish for.

So I think we may see more rises to come, a lot of economists have talked about maybe a rise in September or October. I think they may take more of a wait and see approach as we go and feel our way into that because it does hopefully look like we're over peak inflation, which would be good and I think when we had Debbie Hair on the show in the first series, she said there's always a lag between, you make an interest rate rise over here, it may be nine months before the market really feels that and that's why I think we're starting to see the drop in inflation, the measures the Bank of England took a good way back now.

Megan

So I think that's just a nice little update. I don't know, Paul, if you've got anything else to add.

Paul

I wish I had more good news. As I say, any answer over and above that, I think I'm not one for predictions, especially about the future! But I would say I think the market remains stable. I think that it feels like it's a fairer market this year and we had many meetings last year and we spoke about it being an absolute sellers market and it was great for sellers. Not so easy for buyers. I think we have a more balanced and a more fairer market this year. And as I say, that's no bad thing. And I think our solicitor estate agents would vote any day for the market we have now over the market we've had the last year, year or two because it has been frenzied and that's been challenging and even with resources, you know one of the reasons we have wage inflation is because there's a there's a shortage of skills in the jobs market and I think everyone has their limits to how much they can sustain in terms of workload. So you know a nicer, slightly more calm market is not a bad thing all around really.

Megan

And I know some sellers might be thinking oh these house prices, but at the end of the day, most sellers are buyers, so you might not get it when you sell your house, but you'll feel when you buy the next one.

Paul

Talk to the experts. Yeah, our solicitor estate agents are offering on properties every single day, so they'll know what's being accepted. They'll know what they can offer. You know, you can look at the prices online, but they are three months out of date, Registers of Scotland, it's three or five months. Our guys knowing what's happening on that day or the next day, so you know they are the people you need to be speaking to.

Megan

Yeah. And actually one more thing. Do we have any data on any hotspots, any areas that are selling well?

Paul

I have to say, Leith has been a surprise climber. Summer hits, there's always a summer hit, isn't there? It's Leith that has done really well. Volumes are up significantly, sales prices are up. I think it's to do with the trams personally, I think the access to amenities and there's a lot going on there as we know. So it's been one of the surprise.

Megan

I know, I've had quite a few people coming to visit, whether it be for The Fringe or just for the summer, and they have taken the tram down to Ocean Terminal or just down to The Shore and they would never have done that otherwise.

Paul

And for full disclosure, neither of us live in Leith, so we are not ramping Leith we're merely reporting the facts. The other thing we have seen, it's certainly calmed a little, but still lots of interest on espc.com in the outlying areas. When we look at most viewed properties and where there's general activity, the Lothians, are still very popular East Lothian particularly, always some of most viewed homes are in the East Lothian in fact two months on the run now and both being stone cottages. So maybe that's more about the dream. Maybe that's more about where we want to retire to rather than the property market.

Megan

That those people are being nosey and doing some manifesting.

Paul

Yeah, if you want to tip, have a lovely colour front door, it seems to help.

Megan

Yeah, absolutely. So, I think this has just been a nice little teaser to ease you into season 2.

Paul

We've got a whole host of new episodes coming up, haven't we?

Megan

Yeah, we do. And we've got garden design, our mortgages update as we mentioned, we're going to be chatting about marital status and properties, which should be a really interesting one. We're also hopefully going to have Debbie back on.

Paul

Yes, I love the chat about the economy. So I'm looking forward to that. We'll talk about lettings. We'll do an update on the House Price Report, market sentiment, we'll get some more experts in on that. And also people liked our buying overseas episode, we did one on Spain. So we're going do another and we've picked somewhere else, but we won't spoil.

Megan

No, but it's further afield than Spain.

Paul

Yeah, it's warm. So we'll be chatting to those as well. And there'll be a few other surprise episodes.

Megan

Yes, but we still have a few slots left. So if you want us to chat to somebody about anything to do with properties, whether it be interior design to surveying or anything in between, please get in touch with us on marketing@espc.com and otherwise I think we can chat to everybody next week.

Paul

Yeah, great. But can we just say thanks for everyone who listened to the first series. It was great and we were delighted with the numbers. That's why we managed to fund our new sign. So thanks guys for supporting us. We have had some really good feedback, so we've taken that on. The episodes are going be a little bit tighter. We're going be filming all the episodes. I'll have to iron my shirts now.

Megan

You'll be able to watch every episode on our YouTube channel, so please hit subscribe on there to watch, otherwise subscribe wherever you're listening, whether that be Spotify, Apple Podcasts or any other podcast provider. We will be there every Thursday until the end of the year. That's when our season 2 will run until.

Paul

Yeah, looking forward to it. But thanks again guys and we will catch you real soon. See you later, bye.