Ask any estate agent to cast their mind back to February and tell you what the 2020 market was going to look like.
“Our best year ever”
“Buyer demand through the roof”
And it really did look that way. The long forgotten ‘Boris Bounce’ that followed his unexpectedly high share of the vote in December coupled with still-low interest rates and the end of much of the Brexit wrangling meant that years of pent up demand was finally released in to the property market.
Estate agents must have been eyeing Porsche dealerships in mouth-watering expectation.
By March, the rug was firmly pulled from under them.
A few news reports about a virus in China came closer to home when Iran and Italy were affected and well, we all know the rest. Shutdown, tragic illness and fatalities that touched families across the world.
Britain locked down as perhaps 60 million people stayed at home.
The UK Property Market During Lockdown
The property market didn’t slow down. It stopped in its tracks as viewings and surveys were outlawed and solicitors and agents joined the millions of others who stayed away from work.
And what seems nearly as quickly as it begun, the lockdown was eased for certain sectors – property amongst the first. Sellers tentatively returned to the market, estate agents to their desks.
And then. Whoosh. The pent up demand struck again as three months at home focussed the minds of millions to get moved. The reasons are many and varied.
Some needed more space to work from home, others somewhere to exercise. Gardens and balconies became essential. For many, life had a new perspective – don’t put things off until tomorrow, buy that dream home by the sea or in the countryside now and drop out of the rat race.
The effects of that demand are still being felt – prices are creeping up again as estate agents struggle to deal with the demand for viewings and valuations.
The UK Property Market After Lockdown
However, the flood of new enquiries has now slowed to more normal levels and the property market is holding its breath. What will be the long term effects when the country returns to the new normal and perhaps millions of jobs are lost or at risk. Will banks begin to tighten up lending, hedging their bets in case the market slides?
In truth, we do not yet know. The market is remarkably resilient, the British love their homes but if lending is reduced this could have a devastating impact on the hopes of many would be sellers and buyers.
Many hoping to get a foot on the ladder for the first time might be hoping for a crash and with good reason. The property market is unfair on the younger generation.
But they might want to be careful what they wish for. Afterall, if lending becomes harder, the required deposit (already an eye watering £25,000 in many cases) will become even higher and therefore out of reach of more buyers.
What’s more, if prices free-fall, what first time buyer will want to buy, they will have to wait until they feel prices have hit their lowest – the expression “never catch a falling knife” seems apt.
We asked property expert Jonathan Rolande what he thinks.
“There are three possibilities. A boom, a slow but steady increase in prices or a bust. Much like Goldilocks, we should choose the middle offering. Moderate price increases encourage people to sell or build new homes, increasing supply. But if prices increase too quickly, we’ll be hit with increased lending rates that punish everybody who’s borrowed money.
A bust market isn’t good for anybody. Prices snowball downwards and it can take years and years for confidence to return.”
And what does Jonathan think will happen over the rest of 2020?
“With careful intervention, the government might well be able to stave off a crash but at best I’d say the chances are 60/40. In other words, I don’t think estate agents should put a deposit on that Porsche just yet.”