Are we heading for a Mini Boom and Long Bust Property Market?
The property market can certainly defend itself against most situations from market crashes to international pandemics. Whatever hit it may take it can usually recover in next to no time and usually go against the trend by surging in value.
Currently covid-19 continues its presence globally effecting much in our normal way of lives as well as hitting the economy big time, this pandemic has certainly plenty of sting left in its tail. With lock-downs a constant fear and social distancing a new normal, many people are simply living life day by day unable to plan ahead affecting our lives both in business and socially. Who could ever believe that 2020 and possibly even in to 2021, that events like Wimbledon / The Olympics / Euro 2020 and more would be cancelled and the likes of F1, Fa Cup Final and the World Snooker Championship would go ahead behind closed doors without the atmosphere of crowds / supporters.
Despite these negatives the property market is currently racing ahead with increased figures for many estate agents from viewings to offers. The recent stamp duty holiday could well be the reasoning behind this so called mini boom, though we all know that if the seller knows that the buyer can save themselves several thousand in stamp duty costs by purchasing their property that they will simply add that to the price hence property values are rising still. Many people knew and said this when the stamp duty holiday was confirmed, ‘all this will do is simply increase property prices‘.
So with stamp duty more or less in the favour of the seller, things are still yet progressing well in the UK property market, there are plenty of buyers out there including first time buyers. The stamp duty holiday could very well be a non effect on this mini boom and that it is simply the desire of the British public to move still with the value of homes remaining put or even increasing in nearly all regions. Demand is said to be increasing for property located outside of the city and more towards the countryside and seaside locations – Places where spare rooms and garden offices are much easier to find over high priced town property that hold a much greater cost per m2 and likely lack in garden size / extension / conversion capabilities.
Add to this that immigration is still busy with many coming to the UK for better futures, the natural population increase and especially the non met targets of new homes / affordable homes from the government ticks all the boxes for higher demand for property over supply.
Have we seen the last of covid-19 and social distancing? The fears for many, and especially businesses, is that life has now changed for good and we better start getting used to it. Many industries have been torn to shreds and those still standing within them are likely to fall fail if there are any signs of new lock-downs.
The government has done its best to support business during covid-19 from grants to furlough scheme, though the news is that their support will soon be fading away and once that happens then it is likely more businesses will either close or at least reduce their costs and mostly employees. The wave of new unemployed is going to be quite a number and with this comes defaults of housing payments, rentals and mortgages. There is no way that for years to come we can live with the likes of hand outs from the government and mortgage holidays – This is not how life works.
“I see now more people seeking new employment, a recent search on LinkedIn I unfortunately see many of my connections once in business / employment now having changed their profile to seeking a new role / employment. These numbers will increase for sure.“
Is the recent stamp duty holiday simply a bit of armour added to the property industry before the tough times ahead kick in? Will it be harder to obtain money and especially borrowing for property, the housing market to stagnate and the demand on property fall? Will the majority of the landlord portfolios flood on to the market, the usually two bed / three bed properties that nobody really wants to purchase? Estate agents to go from desperately seeking new valuations to desperately seeking buyers?
Simon Rubinsohn, RICS Chief Economist is quoted as saying: “The strong impetus provided to the housing market is evident both in the results of the RICS survey and many of the anecdotal comments from respondents. However, it is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll. Significantly, some contributors are now even referencing the possibility of a boom followed by a bust.
Meanwhile one of the other notable aspects of the survey is the feedback that there is a greater interest in properties that offer some features that help better manage future lock-downs whether it is access to green spaces, gardens or balconies.”