For those looking to buy or sell houses, lockdown has put many of the best laid plans on hold. Since lockdown was imposed on the 23rd March, the property market has entered into a period of suspended animation. We don’t know when lockdown will end, nor what the financial and economic collateral damage will be for the UK economy and we certainly don’t know what the ‘new normal’ will be or how long it will have to go on for.
So, what do we know? Financial markets, although initially taking fright, have recovered somewhat. Falls of between 10 and 15 per cent across indexes around the world with markets seeming to have stabilised. At least for now. Interest rates have fallen and unprecedented levels of intervention by central banks have been deployed by the largest economies in the world. We also know that working from home for many people is doable and although many aspects of our lives have been interrupted, there’s plenty you can be doing to plot your next move.
Recent numbers posted by Zoopla on the housing market for their UK Cities House Prices Index make for interesting reading. 373,000 property transactions with a total value of £82 billion are on hold. There’s very little activity. Interestingly supply has not changed much with the numbers of homes for sale falling by just 4 per cent since the beginning of March, suggesting that vendors still want to sell. Buyer demand varies around the country but on average browsing online is down 35 per cent. Simply because the market is pretty much suspended, buyers are not motivated right now. That said, interest and browsing has risen in the past two weeks.
Meanwhile, Knight Frank predict 500,000 fewer sales this year and private home building to fall by 35 per cent. You could argue that supply will tighten whilst demand may very well be maintained. With all this information and uncertainty, inevitably there will be issues on your mind if you are trying to buy or sell during the pandemic.
Should you take a lowball offer just to get a deal done? Not unless you absolutely have to. It all depends on whether you have a mortgage to pay off, why you need the money and what’s important to you. Sometimes you have to get a quick sale, but I’d suggest not that quickly and you might be best holding out if you can.
But what if you are selling and buying? This is a slightly different scenario. Try not to buy first without selling. I have been to that movie before and it can certainly provide extra stress and cost if it goes wrong! Usually, I’d advise not to lose out on your dream home and to do everything you can to secure it. In this market, that’s not the right advice and caution must come first. Most vendors will be happy to agree a price and a timetable to exchange and completion which could be delayed.
If you are a first time buyer, I’d recommend you do everything to get the best possible deal. It rather depends on where you are in the buying process and what levers you can pull. But can you negotiate a better price? If you are buying from a developer and can secure the funding, you should certainly look for a better deal. They are motivated sellers. What I would say, however, is that when lockdown does come to an end, I suspect the housing market will move fast. Any bargains will be snapped up quickly. There just isn’t that much overhanging supply and, frankly, housing in times of political and economic uncertainty usually does well; it’s a safe port in a storm and bricks and mortar are a go-to investment. Although there are some who may think a thin market can lead to major price adjustment, that just doesn’t appear to be the case this time around. The pressure to sell isn’t there and without that, vendors are more likely to be patient.
Estate agents are working virtually and it is worth being in contact to find out what’s on the market. The picture isn’t the same across the country and chances are there will be minor variations depending upon your location. There are examples where exchanges have taken place and deals have been done but unless you have seen the property, or had a physical survey, I’d not recommend proceeding. It’s simply adding too much risk.
Is now the right time to invest? If you need a home and have the money? Yes. Whilst there may be uncertainty over pricing and prospects, debt and mortgages, certainly for smaller loans, they are very competitive. I maintain that although a home is an investment, it’s always a place to live and life cannot go on permanent hold just because turbulence is all around. Ultimately if you can afford to buy, upgrade or make decisions and then get on with your life, you’ll look back and agree you made the right decision. If you’re facing job or financial uncertainty, now is not the time to stretch your finances, even if there is a deal to be had or cheap finance on offer. Will this pandemic pass? Yes. But prepare for the long haul and think carefully about where you want to be in five year’s time. Chances are, if you think long term, you’ll take the right decisions now.