Home Sweet Home: How the pandemic affects UK's real estate market
Covid-19 has upturned lives, jobs and livelihoods. Children almost forgot what school was, mums will never forget how tough homeschooling was, summer went past without a proper holiday and jobs are being lost every day. Another area that has – and will continue – to see a huge change over the coming months, is the property and housing market. Covid-19 has re-shaped the real estate market, and the repurcussions (whether good or bad) will be felt well into 2021.
Moving house? Good time to buy; probably not to sell
Reports and estate agents state that the UK property market is witnessing a mini surge since reopening after the lockdown. A likely reason for the same could be the government’s temporary stamp duty cut, meaning buyers could save thousands in taxes (some even pay no tax at all) if they buy a home before April 2021.
Since this is more a buyer's market at the moment, it might not be the best time to sell your property (this is not a definite however; if you have a house in the countryside, this could in fact be a great time to sell – see point below). With people unwilling to spend big money at the moment, with so much uncertainty surrounding jobs and mortgages, house prices are falling. So if you can hold off selling for now (unless, of course, you do manage to get a good deal), it would be wise to do so.
Away from the cities, towards greener pastures…
The new way the world has begun to function (remote working and homeschooling) has changed the economic and social dynamic of major cities across the world, including the UK. With most companies asking employees not to return to the office till at least January 2021, and considering a more hybrid approach to working (i.e. more working-from-home options) even after that, there is an underlying wave of city dwellers now wanting to move to the outskirts/ further away. Since their commute will be minimal or negligible in the future, the picture of a bigger home with affordable mortgage and more greenery looks rosier than being tied down to a small flat with exorbitant rent.
Also, with so many parents having got a first-hand feel of homeschooling, some are deciding to continue the trend post lockdown – another reason getting a larger, more open space with a garden, is more tempting.
So while the real estate market in the cities might be seeing a downhill slope, regional and rural markets are picking up as people are seeing the benefits of living outside cities (more affordable yet bigger houses, with more space for the children). And, after all, who wouldn't want a home office amidst more greenery?!
Downsizing: Keeping a buffer for the future
A lot of families are considering moving houses for no other reason than to downsize, and reduce their mortgage, therefore keeping a buffer for the future in the eventuality that jobs are lost. Post the pandemic's economic repurcussions and Brexit looming ahead, the cost of living is likely to go up and the likelihood of jobs being lost or companies going bankrupt is very real. Downsizing and saving money is of prime concern to families at the moment.
What about my mortgage?
The big question on buyer's minds is whether the after-effects of the pandemic will be similar to the 2007/08 recession. Experts state that while the immediate future is still unpredictable, it is unlikely things will be as bleak. The 2007/08 recession was an economic failure where banks collapsed. While Covid-19 is still a global pandemic that has undoubtedly had a ripple effect on economies the world over, it is predominantly a health crisis and governments did (and are doing) their best to keep things in control.
So, what happens to one's mortgage? There is some good news on that front too as it is still possible to get a decent mortgage. Banks and mortgage lenders are lowering their affordability criteria and dropping interest rates – keeping the current situation in mind – making home ownership more accessible.
So, whether you are looking to buy or sell your home in this current situation, there are a number of factors to think about. But with a little bit of research and planning, it can still be done with minimal damage to your pocket.
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