‘Taking a closer look’
Cormac Henderson, CEO of National Property Trade, gives his commentary on the latest Zoopla ‘Property Cities House Price Index’ and how the property market may react as it re-opens.
Covid-19 has hit many industries hard; it has knocked them off their feet. Will they be able to get back up again? This remains the burning question right now.
The latest Zoopla ‘Property Cities House Price Index’ report shows some signs of optimism for the property market. Browsing online for properties has increased, desire to view is growing and people are not withdrawing properties from the market. Many people who have extra time on their hands due to the lockdown, or their circumstances have changed, may now be considering a move and selling is on their radar. How this all translates to the property market and its rate of recovery, depends on unemployment levels and how quickly the economy can bounce back.
Figures in relation to current activity are interesting purely from an historical perspective but ultimately it is all about what happens next. In a somewhat unexpected move, housing secretary Robert Jenrick announced plans last week to get the market moving; estate agents’ offices can open, viewings are permitted, and people can move as long as they meet social distancing advice.
How the market exits lockdown and how agents and customers move forward in a new world of social distancing will determine future market performance. Just because people can view homes, will they really want to – and will vendors allow them? There will be functional challenges for those looking to sell and move home, and how the market responds to this will be vital. Embracing technology, Covid-19-safe solutions and home buying services will form part of that picture.
Coming out of lockdown is likely to show a soft recovery in terms of volume with that recovery gathering pace as we move into 2021. The market will effectively crawl for almost 3 months, with a slow recovery transaction volume likely to be down by as much as 50% in 2020, with a recovery coming back towards historical levels by 2021. This represents a V shaped recovery and is on the more optimistic side. In terms of pricing, a single digit reduction is possible with a 2021 bounce back. A significant decline in pricing would require two things which were seen in the global financial crash in 2008; forced sellers and a lack of buyers. My view is that this scenario is unlikely.
An economic and residential property recovery does however depend on several uncertainties. How business, employment and ultimately GDP performs in the post lockdown period will shape our future. Government support has been spectacular, but many questions remain unanswered.
Foodservice, hospitality and entertainment businesses are in the eye of the storm. These businesses rely on packed venues, on a consumer’s physical presence. They will experience challenging times ahead when furlough schemes are phased out. These sectors comprise many small, diverse and entrepreneurial companies who will not have the benefit of cash and private equity. They are fundamental to our way of life and could never have predicted Covid-19. To claim that businesses that were unprepared for such a crisis do not deserve support frankly suggests a lack of understanding in the mechanics of younger ventures driven by enigmatic thinkers who do not have the luxury of cash. Typically, that comes later so by the nature of their cycle, these businesses will be leveraged and overinvested.
How these companies emerge from this challenge may in time prove the litmus test for the entire economy. If they were to fall, through in large part no fault of their own, it could represent the beginning of a tidal wave of business failures and unemployment that gravely infects the wider economy. It is vital the government and the public shield those businesses central to our way of life inadvertently hit by Covid–19. We do not want what is happening today to become the advent of corporations replacing local independents.
Read the full Zoopla report here:
National Property Trade remains committed in ensuring employees and customers safety during these unprecedented times. We, as home buying service, have continued to adjust and adapt our working practices to allow us to continue purchasing properties. Our team is here to guide you and discuss the options available when selling your home, contact us today to see how we can help you.