When it comes to the UK’s housing and mortgage markets, there is often no shortage of data and analysis to draw upon when looking to come to a conclusion about how our sector might be performing.
Certainly, over the course of any given month, that data is not only prevalent but often somewhat contradictory as various institutions and organisations use different data sets and methodology in order to produce their results, whether this is around house price levels, asking prices, buyer/seller confidence, surveyor perception, transaction numbers – the list goes on.
It has been an interesting past few weeks though as the data provided to the market has had an ‘other-worldliness’ about it; couched very much in a pre-COVID-19 market and therefore seemingly at odds with the reality ‘on the ground’ as the lockdown was announced, enforced and extended.
Talk of record levels of transactions or house prices rises in February belie the reality of March and April, and while it’s clearly important to have a full picture of the market over a period of time, it will be this period from March onwards which truly shows what we are all dealing with and how the situation might play out in both the short- and medium-term.
Over the next few weeks, we will begin to see the data and analysis, and it will surprise no-one if we suggest it will show a very different picture to the one we have become accustomed to over the previous 12-18 months. As surveyors, we will clearly be part of this and will need to ensure a realistic appraisal of the properties we survey in the market not just now but also over these coming months.
So, what might we expect? Well, one perspective came from Cebr which predicted a fall in average UK house prices of 13%, with regions like Yorkshire and East Anglia seeing falls of 16.5% and the North West and the West Midlands at 16%. Indeed, the region that would ‘fare best’ is Scotland where Cebr is still predicting falls of 10.5% there.
This view is predicated on sizeable increases in unemployment, with wage cuts also impacting on the income levels of UK households. It suggests those regions which have a prevalence of sectors which have been forced to shut down – manufacturing, construction, retail and leisure – will be hit hardest and will see the biggest falls in house prices.
But, this is just one view and it may be very far from the reality of the situation. There’s no doubting there will of course be an impact from COVID-19 on the housing market and house prices, but I’m not so certain this is the right view. For what it’s worth, I see the purchase market, for instance, potentially coming back far quicker when the lockdown is lifted than some other commentators.
The phrase ‘pent-up demand’ might well be pertinent here because one can sense some of the frustration of having to stay home during these months resulting in a real want and need for people to get their homes on their market and to get moving.
I sense we’ll see a large amount of stock coming to market after lockdown, and some of the reasons behind this will not be particularly pleasant but will be the reality of the situation. Namely, people might come to the conclusion from lockdown that they can’t live together and there will be people who have passed away whose homes will subsequently be put up for sale. Not forgetting those who were planning on a Spring listing and want to get ‘moving’ on this ASAP.
Clearly, there is some light at the end of the tunnel and other countries might point the way towards a more positive situation. Lockdowns have begun to be eased in some European countries, with the opening of construction sites and manufacturing, while there has been some speculation from the UK Government that schools would also begin to be opened again. Getting people back to work when it is safe to do so is clearly important and, certainly from our perspective, if we were able to allow our surveyors to begin physically valuing properties again, this would be a major step forward.
At present however, that is not the case, and at SDL Surveying we are focused on supporting those lenders who can accept automated and desktop valuations in order to process applications. It has been heartening to see more lenders utilising the services we offer in this area, and an acceptance that in order to move transactions through the pipeline, there has to be renewed commitment to these types of valuations. This could be a pivotal moment for the sector and one that is likely to be continued and reflected in a post-COVID-19 marketplace.
So, while short-term data and statistics might not seem particularly positive, we must remember to work with the reality we have and prepare for the reality to come. It might be more positive than many anticipate, and we still have to deal with the situation as it presents itself, continuing to do the best for our clients. We will come out the other side and when we do, the market has all the potential to recover, and recover quickly. Let’s make sure we’re prepared for that eventuality.