The property market has reopened in England, so what will happen to house prices? 16 May 2020
Housing market is open for business
Moving house, getting a valuation or survey, going on viewings, and even visiting estate agents is once again permissible in England as of May 13 as part of the government’s loosening of coronavirus lockdown regulations. Housing Secretary Robert Jenrick announced the measures last Tuesday, which include the following:
- Estate agents’ offices can open
- Viewings are permitted
- Show homes can open
- Removal companies and the other essential parts of the sales and letting process are re-started with immediate effect
So first and foremost, what will happen to the 370,000+ agreed transactions which have been on ice since the property market closed on 23 March? Whilst it is likely that some purchasers will be hoping for reductions in their agreed offer, our experience suggests that most are just keen to get moving, and want to continue with their move regardless. That is probably down to 7-8 weeks in lockdown making the urge to move stronger than ever.
We believe that this is going to be a ‘V recession’, which is one that will dip and bounce back really quickly – as opposed to an ‘L recession’ – which is where prices drop and never recover (think Japan) or a ‘U recession’, which is where prices drop and stay low for a while before they start to increase again. The first 2 months of 2020 were exceptionally good for the property market after the long ‘BREXIT’ wait and, at that time, predictions were for a fabulous year for home movers. Of course, that was before we were knocked sideways by coronavirus!
In England there is only around 25-40% of homeowners with mortgages to consider, (most own their homes outright) and once that COVID19 is over, there is really no reason why the market cannot bounce back quickly and the only issue will be where people have lost jobs, or the debt has overtaken them (which, with all of the government monetary incentives in place, is not going to be anything like the 2007/8 crash).
The lending rates are better than ever at the moment, in fact, this is the lowest that mortgage rates have ever been, with a 0.1% base rate, with many people securing 5 year fixed rates, and that means it is a great time to buy if you do need a mortgage. If someone has a mortgage agreed in principle already, it would be unwise to lose that deal and this could see a much quicker return to a buoyant market. It is also an exceptionally good time for landlord investors if prices do fall slightly in the West London area, checking out some great ‘buy to let’ deals must surely be on the cards.
- Invest for the long term
- Build-in capital growth on your purchase
- Research sold property price data before buying
- Keep up with the legals of being a landlord or get a good agent
- Understand and mitigate the risks