The UK’s coronavirus lockdown came into force in March, all but freezing the housing market. Clients who had been looking to move to a new house in 2020 will have been watching the headlines closely ever since.
Now, as restrictions are eased, your client’s plans may have changed.
As lenders begin to work through a backlog in house sales approaching 400,000, surveyors can recommence property valuations and removal firms can begin to work on the logistics of socially-distanced moves.
But industry forecasts vary for the year ahead and financial uncertainties are rife. So, is now the time to put plans on hold? Or a great time to move?
We can help your clients answer these questions.
The year so far
At the start of 2020, the sector was optimistic. Years of market uncertainty resulting from ongoing Brexit negotiations had eased following the Conservative’s General Election win and the housing market was picking up again.
When the UK lockdown was announced on 23 March it effectively froze the housing market. Government advice – to postpone planned viewings and to move only if ‘reasonably necessary’ – led to half the number of transactions in April compared to the same month last year.
At the same time, prices actually increased – by 0.9%. That promptly changed in May, when the average house price fell at its fastest rate since the financial crisis. May prices were down 1.7% from April.
What does this tell us about what the rest of 2020 has in store? And what makes predicting the market so difficult this time around?
An uncertain forecast for 2020
Meanwhile, the property website Zoopla reports that property sales in England have largely rebounded to pre-lockdown levels. The report confirms that pent-up demand has led to firmer prices – on average 6% higher in the week to May 19 compared to the same week last year.
On 15 June, This is Money reported that ‘optimistic home sellers are bumping up asking prices’.
Estate agent Knight Frank confirms that ‘it had its best-ever week outside London, with buyers flooding back to pricey country properties.’
This bounce-back may be short-lived. How the market reacts in August, as the furlough scheme ceases and mortgage holidays stop, remains to be seen.
Adding to the uncertainty over house prices are conflicting reports over whether those looking to move are keen or reticent to re-enter the market.
Zoopla suggests that 60% of would-be homeowners intend to push on with their plans to move now the market has reopened. On the other hand, Nationwide has reported that ‘would-be buyers plan to wait six months on average before looking to enter the market.’
2021 forecasts are more positive
Clients deciding whether to move now or delay will need to factor in current, and future, economic certainty, as well as the possible impact of a second coronavirus wave.
One certainty remains though. With the reported backlog of nearly 400,000 house sales, whenever clients choose to start the process of looking for a new property, the process is likely to be severely delayed.
Knight Frank’s confirmation that buyers are turning to ‘pricey country properties’ could signal changing priorities for house buyers, and a possible emerging trend for the year ahead.
The Guardian reports that huge numbers of home-buyers are ‘plotting a move out of the city to a rural area or smaller town.’ It lists ‘Winchester in Hampshire, Newbury in Berkshire, Canford Cliffs in Dorset and the East Neuk of Fife on the east coast of Scotland’ as areas seeing particularly high movement.
The reason for this city exodus? Lockdown – albeit in an increasingly eased form – is now three months old. The gap in experiences for those with and without gardens has only widened during that time. Rural properties with large outside spaces look set to become increasingly popular.
Home office space is also in demand and could inflate house prices post-lockdown. As many enter their third month of remote working, many may have decided that it is here to stay – their lengthy commute a thing of the past.
Increased interest in rural areas and smaller towns with office space highlight this shift. With many companies continuing to operate ‘business as usual’ during lockdown, might it be hard to justify a return to large offices and their associated overheads?
If homeworking becomes more prevalent in the post-coronavirus world, transport links will become far less crucial and satellite and commuter towns might suffer, benefiting more out of the way locations.
Get in touch
If you have clients that would benefit from discussing the housing market or the pros and cons of a house move in the next few months, please get in touch with us. Email firstname.lastname@example.org or call 0116 2407070.
“At Boolers, you know that things will be dealt with properly and professionally. A real safe pair of hands!”
“I have always found the quality of advice, technical knowledge and level of service is second to none. ”
“Thank you to all of you for such a wonderfully smooth transaction! Hope we can do it again some time.”
“Boolers provided excellent advice when we needed it most.”
“Boolers have provided myself, family and business with pension and investment advice for over 30 years and continue to provide a high quality professional service to us all on an ongoing basis.”
“Chris Ball has been our Financial Adviser for many years and, from the start, we have been impressed with his strategic sense, his deep knowledge and his skills in helping us build our own successful retirement. He understands our aims and how to achieve them and has taken great care of us throughout. ”