COVID-19 and the Housing Market
Reasons to be optimistic in the mid-term?
One positive is that low interest rates should be available for a while and will likely be held low until the economy recovers. Although it is possible we could see some inflation as a result of quantitative easing, it is unlikely to happen quickly with businesses being encouraged to borrow to help growth recover. Consumer confidence will also need time to recover.
For buyers, this crisis could be a good time to begin a house hunt. Although some sellers will try to wait for the uncertainty to end, there will be some who are looking for a quick sale and so a deal can be done.
Landlords and investors, given the unpredictable nature of the stock markets, this could result in property beginning to look like a reasonable alternative. This has happened during previous financial crisis and we could see a similar pattern again.
Confidence is the bedrock of the property market. It is hard to determine how things will play out in this respect although short-term confidence may be a little low this is often when the best bargains are to be had. Once the economy stabilises and begins to show signs of life, people will be more willing to commit to purchases.
It is possible that we may see some changes in Government policy in relation to taxation that could help boost confidence in the property sector. Property is often seen as personal indicator of economic well-being.
Although there are currently logistical challenges in marketing properties these will pass and we could see a degree of backed up demand finding its way through to the property market.
The Evening Standard ‘Homes and Property’ section reported in February that:
“Housing affordability in the UK has increased at its fastest rate in eight years, according to new figures, which would usually set the scene for an active spring market.”
Recent times have seen average wages increase quicker than percentage price rises for property, collectively improving affordability. With average house prices at the start of 2020 just 0.2% higher than last years’ average.
There are therefore reasons to be optimistic about the property market, there will be bargains to be had, but the scale of any upswing will be reliant on multiple factors. Logistical challenges aside confidence will as ever be the key influencing factor.
Commenting on the state of the market Pictons Partner Harshinder Hundal said:
“Despite the challenges we face this could be a good time to review lending terms, leases and put in place a strategy to make the most of the opportunities that will undoubtedly arise.”
Should you require help with a property purchase, re-mortgaging or need assistance with a lease please contact Harshinder Hundal.
T: 01908 355743