First published by Financial Reporter
This year’s Six Nations kicked off over the weekend and having caught up with a few preview shows and podcasts prior to it, I heard the phrase, ‘This year’s tournament is really difficult to predict’, a number of times.
After which, the pundit or commentator who has just uttered those words, will then go on to predict not just who they think will win the weekend’s games but the team that will win the entire tournament. Which requires a prediction of every single game over the next six or so weeks – so perhaps not that difficult to predict after all?
What we do know is that momentum is often vital when it comes to winning the Six Nations. Teams that lost on the first weekend will now find it very difficult to win the whole thing, while those who got those early wins on the board are more likely to grow as a force, perhaps becoming unstoppable by the end.
Grand Slams are still difficult to achieve but in recent times they seem to happen more and more – since 2002 there have been 11 Grand Slams. In the 18 years prior to that, there were only seven. It’s unpredictable but get on a roll and you never know where you might end up.
At a recent Business Leader Panel Q&A I was asked what might be the major challenge we all face during the course of the 2021 and my answer was, “Dealing with the unpredictability”. Much like the Six Nations, at the start, it’s very difficult to predict what is going to happen in any given year but traditionally, as time moves on, the market often works on some clear themes and timelines that we have come to rely on and prepare for.
However, from my perspective, this ‘natural flow’ of ‘normal’ years is not likely to be there in 2021. Much like, as in 2020, we saw some major ups and downs in activity, for instance, the likelihood is that this year will be similar. And it also seems more likely that the months when we would normally expect to see a boost, or a lull, may not turn out to be the same ones as historically.
For instance, Q1 is likely to be extremely strong for completions, because of the stamp duty holiday deadline at the tail-end of March. Now, in any other year, April/May/June would be key months for our sector – Spring leading into Summer is traditionally a busy period for the housing market, but with activity potentially having been brought forward into Q1 because of the stamp duty saving, can we anticipate that Q2 2021 will follow along such lines?
The likelihood appears to be that the entire industry might well heave a sigh of relief in April that lasts a good few weeks, taking into account Easter, before girding itself for a late Spring bounce that runs through the entire Summer and keeps growing into Autumn. Again, there will be ebbs and flows of business but we should not forget that normal years do not begin with lockdowns, and neither do they entail pandemics which are likely to fundamentally change the working practices of many businesses like this will.
The key for all of us is how we deal with those different flows of business throughout the year, and whether – as I expect – we’ll also get another post-lockdown bounce of activity as people come to realise that their current living arrangements don’t work for them in such a situation, and that they no longer need to be living in the same types of places, because they don’t have to travel into the office every day.
The pandemic has delivered this element of unpredictability and it will continue to have a major influence on our market and what happens next. For instance, we have a Budget announcement in a few weeks, plus some major milestones such as the furlough scheme finishing at the end of April, and what might that mean for employment figures, incomes, and house prices/activity? We simply can’t yet know.
What we do know is that lenders want to lend, targets have been increased, and they are already making their moves to meet those targets by launching back into sectors which were not a priority last year, perhaps most notably high LTV lending. With Bank Base Rate at just 0.1%, lenders also have some potential wiggle room to cut rates further if they want to secure larger business levels, and this may help in terms of both purchase and remortgage activity.
Overall, flexibility throughout 2021 will be vital. It’s about being prepared to deliver your services and products whatever the outside fluctuations and being able to take advantage of the opportunities wherever and whenever they might pop up. They will be there, but not necessarily at the time or place where you would normally expect them.
Simon Jackson, Managing Director at SDL Surveying