2008 Was An Economic Crisis, This Is Different
In an entertaining discussion with David Opie from Today’s Conveyancer, Karl Knipe, Director at Kings Group Estate Agents outlines why it is not all doom and gloom.
In his owns words, Knipe, who is a well known industry figure and regular contributor to market commentary, including his own radio show, shares his thoughts on what happens next…
“This is nothing like 2008, the scale of the human cost is disastrous. At times this whole situation has felt a bit like Designated Survivor; we think we have a plan and then 10 seconds later something happens and it goes out of the window!
“2008 was an economic crisis, this is different.
“Looking at the property market, in 30+ years in the industry I can honestly say I have never seen so many potential drivers for a comeback.
“We’ve had 3 years of pent up demand with the uncertainty over Brexit having a big impact. In the weeks leading up to lockdown we were 32% up on the same period last year, so you can see that clarity brought greater confidence.
“And that demand hasn’t gone away, it’s been cooped up in lockdown for the last 14 weeks.
“Then we’ve got to consider other drivers.
“Lockdown has given people something they’ve never really had before… time. People have been reassessing themselves, their lives, jobs, ambitions, marriages.
“Take relationships as an example, and this is not something any of us relish, but would we be surprised if in the next 12-18 months we saw a record numbers of relationship breakdowns and divorces?
“This is a driver. Each split yields up to 3 transactions whether they be sales or lettings (selling the family home and separate accommodation for both partners).
“We have already started to see people reassess whether “moving to the sticks” was the right thing to do. It sounds ideal in retirement to get away from things but actually this situation has meant people are split not just by lockdown but also geography from loved ones and also local amenities.
“In towns we’ll see a big demand for garden flats as people have realised the value of the outdoors in as a result of this situation.
“Sadly we’ll see a rise in unemployment which will affect income and people will cut their cloth accordingly
“If, as we suspect there might be, there is some stimulus by cutting Stamp Duty, suddenly the Buy to Let market starts to come back a bit
“The lettings market shows not signs of drying up
“We’ll continue to see foreign investment coming in to the UK, particularly London.
“And I think one of the biggest drivers will be the lenders, who have had their lending reduced by 15% as a result of lockdown so they need to catch some of it up. They’ll loosen the strings a little and increase loan to value options… and with interest rates as they are it all becomes a little more affordable.
“This is not to say that there will be plenty of challenges.
“Chain management remains a challenge and will continue to do so especially in the coming months as buyers pull out because financial challenges.
“Demand continues to outstrip supply, one of my offices has got 12 properties on the books…. 12! I’ve got 3-4 buyers for each property!
“I think there are reasons for the property market to be positive about what is coming. Yes, we’ve some tricky waters to navigate, and plenty of rocks to be aware of, but there are some significant drivers for growth over the next 18-24 months.
“One thing that has come out of this situation for us is that we no longer have the resource to operate as we were doing. Our offices are now appointment only to accommodate both social distancing measures and also staffing… it was once inconceivable to consider but occasionally our offices are now closed at times during the day while staff are out on appointments.
“But what other industries operate on an appointment only basis… doctors, solicitors, dentists… professional services. There is an opportunity here to really change perception and bring about greater professionalisation.”