What a difference a month can make! Our March Market Comment was very positive and full of the joys of spring. Indeed, the Halifax subsequently reported that house prices were 2.1% higher at the end of March than they had been at the end of December 2019. The “Boris Bounce” was very much in evidence, but who’d have thought that Boris would now be fighting for his life in intensive care, along with thousands of others, due to the pandemic.
As for the property market, this has, for the time being, been put on hold. The government has strongly discouraged moving and mortgage lenders are tightening their belts too, with a deposit requirement of over 40% becoming widespread. According to Zoopla, in the next three months, we can expect a fall of at least 60% in the number of housing transactions.
The moving-related knock-on effects of the lockdown are widespread: estate agents can’t appraise, Domestic Energy Inspectors can’t inspect, valuers can’t value, surveyors can’t survey, so most buyers can’t buy. Even if they could, banks’ ability to process mortgage applications with reduced staffing levels is significantly reduced and underwriters’ attitude to risk is becoming more cautious daily.
As soon as we are back to some semblance of normality, subject to any damage done to the economy at large, the indications are that it will be “business as usual”. Interest rates are likely to remain extremely low and any inflationary pressures caused by massive government borrowing could even be good for the property market as investors flock to bricks and mortar.
However, investors dependent on short-term/holiday lets are likely to be cautious due to travel reluctance and ongoing movement restrictions. This could be a good thing as it would release a significant number of rental properties back onto the permanent housing market, partially easing what has become known as the housing crisis.
Certainly, Britain has proven throughout history to be a supremely resilient nation. Forecasts suggest that we are about to enter a time of huge macro-economic growth and only time will tell whether the virus will be seen simply as a micro-economic blip in an otherwise healthy post-Brexit economy.
For now though, my team have been busy working from home, keeping clients informed, and doing their best in challenging circumstances. Legislation is changing rapidly, but also there are still things like MEES, Gas Safety and Electrical Safety checks to be organised to keep landlords compliant.
We are still very much open for business – even if only for an advisory chat on the phone. Please feel free to call us on 01202 554470 and we’d be happy to share the local market update with you.