As we emerge from the Covid-19 pandemic, you can find statistics to prove pretty much any movement in the housing market. Up. Down. Sideways. At the beginning of the month, the Nationwide reported that house prices fell 1.7 per cent in May. The largest fall in 11 years. The latest data from Zoopla revealed that demand for housing is 54 per cent higher than at the start of March. And Savills reported a significant rise in activity across their offices in England with deals agreed, new instructions and exchanges all sharply up on previous weeks. Meanwhile the RICS says surveyors are recording falling house prices but increased activity.
So, what on earth is going on? Is that report of a drop in prices good news? And what should you do if you are planning to buy, sell or even stay put?
Try as I might to find reasons why the market may falter, I am actually fairly positive about the prospects over the coming months. Many of the statistics we have seen which demonstrate a house price fall are historic. Those from building societies are based on mortgage applications which come at the end of the process of a house sale. It’s not a surprise that prices would fall in the middle of lockdown or in the grip of a pandemic. Now measures are being relaxed somewhat, the forward-looking metrics are more likely to be correct. So, if you really want to know what’s going on, look at statistics from the websites and agents now. They’ll tell you that viewings and interest is up. Internet hits are at a record and it’s not just pent up demand. Similarly with housebuilding having been largely on hold, there’s hardly a glut in supply.
Here are five reasons to look at property now:
1. Vendors are motivated. If they have had their property on the market for a while or they have just put it on the market they have been thinking about it over lockdown. They are hot to trot! They want to sell and a willing seller makes them open to offers.
2. Interest rates aren’t going up any time soon. That means there are some excellent deals out there if you have the income to justify a new mortgage.
3. Overseas buyers are largely out of the picture which means that local buyers (this particularly applies to London) will have preference and if you are able to move fast, your offer may win over someone who’s delayed but offers a higher price.
4. If a property needs work, it’s a particular prospect for you to ensure you cover your costs. Many buyers have looked for properties that are “done”. There’s plenty of labour around keen to get underway with projects and there’s a real opportunity to buy with a margin whilst being able to get the home you really want as opposed to someone else’s vision.
5. If you are wanting to have a property that’s a little further away from a town or city centre there are plenty of options available. Why not secure your rural idyll before the market dynamics and prices change with situations like Covid in mind?
This last point is probably the most pertinent. It’s arguable that the property market is about to take a turn not seen since the 1960’s and 1970’s. A desire to live away from the urban metropolis. Social unrest, a move towards 24 hour living, rising prices and a change in how we work, requiring you to be in an office or single location is dramatically shifting. Before, however this was to the suburbs and commuter belt. Now, with homeworking and the internet, further afield can work. This makes a rural lifestyle and one with, perhaps, a longer commute but much more for your money a real option.
Urban prices may fall away but the top end is likely to remain consistent because those markets are still sought after for the international jet set and those who already have second homes. Perhaps the biggest squeeze (and future opportunity) are the well located 2 – 3 bedroom house or flat with precious little outside space that’s somewhat expensive for what it is.
For now, I’d suggest you really work out what you want to do. The smarter buyer will be ready to move. Here’s five easy preparatory steps you can take:
1. Start off with sorting out your finances. Speak to lenders to establish your budget. Make sure you are ready to pounce.
2. If you have a property to sell, get that done first. Housing chain buyers are likely to lose out. In a period of uncertainty, certainty wins the deal.
3. Do you want a house to do up? Or one that’s been done? Make a list of the ‘must have’ features and be sure to crosscheck them in terms of their importance to you.
4. Identify your target location. Down to the road you want to live in, where the sun is in the afternoon (if that’s important to you), size of outside space and public transport too. Go and visit and different times of day and make sure you know the key local estate agents.
5. Don’t delay. Whilst there’s uncertainty in the market, you could pick up a deal. Go for quirky features. Be careful about location and also make sure that you know what’s being planned in terms of development. You’d not wish to live with banging and building going on next door.
I am optimistic about the immediate future. As the equity markets continue to display uncertainty and with the prospects of more lockdowns in future, I’d want to be settled and ready to live a life with less ability to travel and go on holiday. Home time is more important now and so is where you live. Instead of just being a financial decision this is about giving you and your life certainty whilst all around you social and economic change takes place. Prices are set to rise so now is the time to act.
James Max presents the Early Breakfast Show on TalkRADIO and is a qualified chartered surveyor. Twitter: @thejamesmax