Last week a client who is about to make a life changing decision asked me the very question many sellers are asking:
“I’ve been reading about the impact that the COVID-19 outbreak is likely to have on the economy and the property market. I’d value your thoughts on what impact you think it will have on house prices?”
This was my reply:
Well the honest answer is – nobody knows.
Four things to consider for now…
Pent-up demand, unemployment, lenders and lifestyle change.
What I can tell you for sure, there is still a huge demand to move.
My team individually called all of their clients just after lockdown to establish 2 things – who will still be in the market after lockdown and who wouldn’t.
Surprisingly it became very apparent that most of the buyers just saw this period as a temporary short, sharp shock that we will get through, but they still wanted to move.
The question concerning house prices got brought up a few times but most of our buyers are serious, genuine movers who are moving long term, ie staying in the new home for 5 years or more and therefore not making decisions just on price adjustment.
Not one potential buyer thought prices would crash as indicated in some press.
When I get asked these questions I don’t take my research from the media, I take it from our buying audience.
The majority of our buyers definitely wanted to be kept informed, some were added to ‘priority viewing lists’ once we are able to move freely and some have already enjoyed our live virtual viewing option where they could see inside the chosen property using the latest video call methods with one of our associates. We have had so much fun with this new method.
And now we are broadcasting live ‘open homes’ through Facebook which works a treat.
So there will be pent-up demand when we get ‘released’!
Unemployment is a consideration. There clearly are going to be some employment issues when some businesses will have no choice but to close. However, the government are stepping in to help the businesses that were stable before COVID-19.
We will have to see, nobody really knows. No point in speculating too much either.
Clearly if we have massive unemployment on the horizon then that will have a knock-on effect. But it will be a simple price adjustment and as long as sellers take good advice they will still be able to sell, albeit maybe at an adjusted price.
If you are selling and not buying on then this will feel uncomfortable but if you are buying on, particularly if you are upsizing, what you ‘lose’ in one hand you are likely to gain considerably more in the other. So the market will still move, albeit a bit slowly to begin with, until sellers and buyers gain their confidence back.
This is a situation we have experienced a few times at Campbells – what’s different now is that we are all locked up and we don’t know what will happen when we are released.
We’ll have to see. Don’t worry, we have 30 plus years of experience so as long as you can accept an honest and constructive approach you will be fine.
As a matter of interest I wrote a book about this subject back in 2009 when the market was really tough – if you click on this link you can ask for a copy and my team will send you one or you can buy a copy from most book outlets. Google ‘Sold – how to sell your property guaranteed’.
I’m planning to publish a 2nd edition which will include all of the digital marketing methods that weren’t around back then.
We published the book to help consumers that weren’t our clients to at least have some guidance to refer to, how to prepare and what to expect from an extraordinary estate agent.
The majority of home movers will still be receiving an income even through the furlough scheme and if they retain their jobs they will be perfectly able to move. If anything they will have more money in their pockets!
I have a funny feeling there will be all sorts of reasons for upsizing and downsizing. What do you think? The market will suddenly start moving again so I would get prepared now and be ready for the re-bound!
We are advising our current sellers not to come out of the market. Tweak their photographs and adjust their price maybe but if you genuinely want to move now is the time to stay and be at the top of a buyers list not amongst lots of others as sellers come back to the market.
Another thing that we must consider is that even after a few weeks of lockdown the dynamics of how we are living will have changed in many households. Working at home? I know I need space. More people will work from home in future.
I’m afraid we are now sadly carrying out virtual valuations for couples that have realised they need to move their separate ways after lockdown.
Some families have definitely realised they have outgrown their property and looking to up-size.
And one client last week, has now realised she doesn’t need to live in such a huge home having been told to isolate for 12 weeks.
As we go through the next period of lockdown there will be many other reasons why people need to move.
The only other hindrance could be the lenders, but my experience and gut feeling tells me that the government will ensure that the lenders have enough funds to lend at sensible rates with fair LTV’s (loan to value).
Let’s be honest, borrowing money for a new home has never been so cheap!
If anything I would jump at the opportunity to buy a new home, if I were a buyer, because this will all pass and it will take time for the confidence to come back, or maybe it won’t, but when it does, the property market will take off again!
If we all wrote a very nice letter to the chancellor he might just cut Stamp Duty for 12 months – now there is a method to watch out for because that would be a huge help.
As I said, nobody knows, but rest assured my team and I will be around for the re-bound so you can be sure to get the very best advice nearer the time.
Paul
