Is the property market in an extended lockdown too?
In 2020, life as we knew it was turned upside down as the COVID-19 pandemic engulfed the world. There were major changes in every aspect of daily life including work patterns, shopping habits, schooling, socialising and travel.
The property market was also hit as the first lockdown meant that no house viewings or surveys could take place and 400,000 house purchases were temporarily put on hold as valuers could not complete their work
One year later, the pandemic is still affecting everyday life and working from home, homeschooling and virtual family get togethers have all become the ‘new normal’. There is now light at the end of the tunnel. The mass vaccination programme in the UK is one of the most effective in the world, but how will the extended lockdown affect the property market?
Brexit followed by Covid-19 not a great start to 2020
The 1st January 2020 opened a new chapter in the history of the United Kingdom, as it was the first day of ‘flying solo’ having left the European Union.
January and February are traditionally the quietest months for the property market, but it was quieter than usual as many home buyers were unsure of the impact that the divorce from the EU would have. Many foreign investors, who have traditionally liked to buy property in London, felt unsure of committing themselves.
March is traditionally one of the best month for selling a property as demand usually outweighs supply and houses are bought quickly and command good prices. March 2020 started surprisingly well, but by the third week of the month, the UK had gone into its first lockdown to try and halt the rapid spread of COVID-19. That lockdown lasted eight weeks and in that time almost all property transactions had ground to a halt.
DIY became the norm
Families found themselves living, working and home schooling within the same four walls and for most it was more than challenging. Spending so much time at home, meant that many started to assess their homes and to tackle all the various DIY jobs that were long overdue. Others designed outside areas for their gardens that would give them extra space and help ‘ring the changes’ during those long and difficult days.
People evaluated their homes
Most home owners and renters had never spent so much time at home and they found themselves evaluating their requirements. A number started to house hunt. Since the start of the pandemic, there has been a huge change in the type of home people want. Open plan living areas are much preferred as they offer flexibility and can be used for working from home, home schooling, fitness, exercise and relaxation.
Many people have realised the important of having a private garden and these have increased dramatically in popularity – especially those that have a large decked area or conservatory.
With so many people working remotely, the need to be in town and city centres has diminished and many house buyers now like the idea of living in a pretty market town or rural community.
Changing demands on Estate Agents
In the early days of the pandemic, property companies had to quickly adapt to the situation as the industry was locked down and unable to operate.
Having a good online presence, suddenly became crucial for Estate Agents. Although the number of house purchases had slumped, many potential buyers were taking an active interest in the property market, but were doing so online. Estate Agents who had been reluctant to embrace modern technology found that suddenly it was key to their business. Websites had to be smartened up and made quick and easy to use. The quality of information about the properties displayed had to be comprehensive with in-depth information about energy efficiency and the locality. Importantly, all the information had to be current. As potential home buyers spent time house-hunting online, they demanded excellent photographs of the property plus 360º virtual tours and zoom meetings with the property owners so their various questions could be answered.
The first lockdown ended on 1 June 2020. Many house owners who had spent the lockdown deciding what they needed from a home, immediately started buying property and this led to a sudden increase in house prices in many parts of the country.
The stamp duty holiday – A welcome boost
In early July, the property market was given just the boost it needed. On 8 July 2020, Chancellor Rishi Sunak announced details of the Stamp Duty Holiday and many house buyers were keen to take advantage of the sizeable tax break. For buyers purchasing a main property valued up to £500,000, there is a saving of £15,000. Those buying more expensive properties costing £500,000- £925,000 can save £15,000 on the first £500,000 and pay 5% stamp duty on the balance.
The Stamp Duty Holiday certainly led to a small property boom in Autumn 2020. This incentive will be ending on 31 March 2021
Light at the end of the tunnel
Certainly, property experts are optimistic that March 2021 will be a good month as this month is traditionally the best month for selling property as there are usual more buyers than properties so houses sell quickly and for good prices.
House buyers with the ability to buy in cash as well as wealthy foreign investors may become popular as a means to selling a house as buy and complete a sale fast and efficiently.
During the current lockdown the property industry has remained open throughout. This has been important nationwide, but especially in London where property is a large part of the capital’s economy.
Estate Agents are categorised as essential workers because people do need to move house. Removal companies have been able to operate and plumbers, electricians etc. are able to continue their work.
If and when the current lockdown ends we will more than likely see an increase in house sales as there will be a backlog of people wanting to sell up. In addition as spring is traditionally the best month to sell a house we expect to see a nice boost.
Whether the increase will be enough to stabilise the property market is yet to be seen and further lockdowns will only cause the property market to slump once more.