The Housing Market - Difficulties and reasons to hope!
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Existing Buyers and Sellers - Still resolved about making the move!
Many people are wondering how the property market will fare in the coming weeks, months and years. Although we don’t have the answers to those questions, we can make some general comments and observations.
Many people are wondering how the property market will fare in the coming weeks, months and years. Although we don’t have the answers to those questions, we can make some general comments and observations.
Whilst there is now likely to be a hold on the property market as prospective purchasers are unable to view properties or to move; the Government have taken strong steps to sure up the property market by allowing urgent/essential property transactions to proceed and encouraging banks to continue lending not only by the recently announced backing for loan facilities but also by the Bank of England’s cutting of the interest rates and the setting of the countercyclical capital buffer rate at zero.
The real answer to the question perhaps lies with the economy. If the health crisis can be brought in hand relatively speedily, limiting the damage to the economy, then the property market is likely to pick back up where it left off. We would anticipate a ‘bounce effect’ whereupon purchasers and sellers re-enter the market with a renewed sense of wishing to get on with their lives. This potential scenario is supported by the UK's largest mortgage lender, the Nationwide Building Society, and is underpinned by strong property market fundamentals, namely the low cost of borrowing and a lack of available housing.
If the crisis continues for an extended period of time, creating longer-term damage to the economy, this could lead to a furthermore prolonged hangover in the property market as the two go hand in hand.
What will property values do? Again, this is impossible to determine and will largely depend on the length of time the current lockdown must continue. Many commentators are expecting a short term dip in property values followed by a bounce and the continuation of rising property values over the longer term. The stock markets have seen significant disturbance as a result of the current crisis and property may remain a stable investment in comparison.
What is the market currently doing? Some agents have reported a drop in newly agreed sales of approximately 70% since the lockdown began. This is not surprising given the restrictions in place. We have seen a handful of purchasers either explore the option of trying to renegotiate or withdraw from their purchases. The majority have sensibly decided to sit tight. They are allowing their solicitors to continue to the progress their purchases and sales to the point of being exchange ready with the expectation of moving as soon as the restrictions are lifted. It would seem to buy the right home for an expanding family, job relocation, school catchment or retirement etc is still the key factor in people’s decision making. In other words, there is still an innate demand for homes that that may see the housing market through to recovery, as it has done in other very difficult moments for our society over the last fifty year.
One thing is for certain, however, no matter how difficult the circumstances are that we all face at this time, it has brought out the very best in so very many people. Whether it be the 750,000 volunteers to help the NHS, communities coming together to support the most vulnerable within them, employers and work colleagues pulling together in a unified manner, embracing technology and devising new and inventive ways to work from home or simply a renewed appreciation for our health and emergency service workers.
Stay safe, stay home.
The Robert Bell & Company Team
