Too many commentators are full of doom and gloom about the property market with the Covid-19 virus lockdown, thinking this situation will never end.
Many people will be wondering why they should make the biggest investment in their life at a time of great economic uncertainty.
As the government has requested that the housing market effectively shuts down while we fight the pandemic, there will, of course, be disruption and pressure on pricing.
However, in the longer term, is the market doomed?
At Cunningtons we do not think so, and in fact we predict a strong recovery.
Why a strong recovery?
Before the pandemic struck there was a shortage of supply and an increase in demand for good property. We certainly saw an increase in new conveyancing instructions. That dynamic will not have changed.
Another reason to expect a pick up in the market is that interest rates will be held low for some time to come unless or until the economy recovers. If you are contemplating a house move, be sure to make the most of them.
What makes the current issue different?
Unlike in some previous market corrections, this time there should be less pressure to sell and realise your property assets. That means prices will most likely remain reasonably firm. Vendors will sit out the market turbulence until a property is sold rather than slashing prices to achieve a quick sale.
There must be some clouds on the horizon? Well, yes, of course there are. If banks were to get into a position where they became insolvent then this would have serious implications for the housing market. But this is not 2008. The banks seem to have strong balance sheets. Further, the sharp rise in unemployment that is a strong possibility as a result of the pandemic will put a dampener on the economic recovery and much also depends on the availability of mortgage products, and the attitude of lenders to repossessions.
Importance of a strong housing market
That said, recent history suggests a thriving housing market does wonders for a government’s popularity so we suspect action will be taken to help it recover. There are various measures that can be taken such as SDLT (stamp duty) reductions, mortgage interest relief perhaps, or easing of borrowing requirements.
Should I buy this year?
If you have been considering a house purchase then after this crisis could well be the ideal time. Why?
Here are two potential scenarios which you may want to try and get ahead of:
1. Once the market begins to function property again, the supply and demand dynamics will fuel price rises. Those rises we think will be quick and a step up, there won’t be a gentle rising curve.
2. There will be vendors keen to sell and deals to be had, particularly for new builds once house building resumes. And depending on, as mentioned above, lender repossession rates after the mortgage holidays, we could see a rash of property which needs to be sold quickly.
The best way forward …
This does not mean that you should blindly go and buy the first thing you see. Read through our Guide to Buying
We suggest using the time you have now to carefully research the locations you like and take stock of your financial options.
You should also get your conveyancing solicitor on board early because they will get busy when the rush happens, and the more you can do ahead of time, the better placed you will be.
As a seller, why not do those small DIY jobs you have put off, or de-clutter so your property looks at its best when the market picks up again. Read our Guide to Selling for inspiration and ideas.
This way, as a property seller, or a home buyer, you will be well placed to make the most of the market changes when they happen.