The one thing that has proved to be resistant to COVID-19 is the housing market, which has if anything fed off the pandemic!
Looking back at the Spring lockdown it seemed to act as an incubation period as Coronavirus fuelled people’s desire to move South and West to larger homes, often in more relaxed rural locations at a more affordable level.
Across our offices potential buyers have wanted larger properties with larger gardens, land very often, smallholdings, residential farms, good views and clean air space around them. The availability of good schooling (both state and private), at home work space not just a study but a designated area of the house, or suitable buildings to convert have all been desired.
They want to be carbon and possibly now phosphate neutral, they want buildings for business storage, access to train stations, access but not necessarily proximity, and that is the important factor that has changed and is particularly poignant for West Dorset!
Employers are now relaxed about the regular attendance of their employees in central offices, which can now vary between once per week to, once every two weeks to once per month, and I have even spoken to some people who say they are probably never going to return to the offices again.
Working patterns have made a huge change in what’s going on this year and future years to come. Another change has been the growth of technology and our increasing reliance on the internet as a source of information and conducting our lives and businesses. The requirement for good levels of internet speeds can now be a deal breaker when selling a property. If there no hope of getting a decent download speed, then we are unlikely to go much further with the sale with some buyers.
So we are now faced with the open ended second lockdown. The question is, what will happen to this bull property market?
According to several building societies, most recently Nationwide, have said that house prices are growing at their fastest rate for over five years – I would say they are possibly growing at their fastest rate for 15 years since 2006/early 2007. This is in turn affecting rental levels for residential property which are now seeing growth in rents due to a lack of available supply.
The mortgage market however has changed over this period. We have historically low levels of borrowing - but a word of caution. Many mortgage products are being reduced on a daily basis; whilst lenders consider the effects of rising unemployment, a possible more inflationary economic climate next year and increasing levels of tax all of which will affect the ability to service borrowing.
We know that these extraordinary market conditions cannot last forever. This second wave of precautionary measures may even act to fan the flames of the current market and I think we will see continuation of interest from outside areas with buyers migrating West.
Historically we have sold a lot of property to buyers from Hertfordshire and Surrey, buyers who have already made the first move out of town some years ago and commuted since. Now we are dealing with more buyers from the central cities. Many of these buyers are moving to the rural areas for the first time. A lifetime dream being brought forward by the catalyst of recent events. They will need help with their new lives and we are all well placed to serve them.
For those buying or selling a residential property at the moment undoubtedly completion by Christmas is the aim of many people, and there is another target date currently on our radar of 31st March 2021, which is the Stamp Duty relaxation measure, which is due to end. I think the question is will that be extended? I think the length of this second lockdown will dictate if the Chancellor is prepared to extend that.
It has undoubtedly been a huge success at keeping the property market fluid and the property industry fully employed; but inevitably a huge loss of income for the Treasury, which will have to be recovered in some shape or form. Will stamp duty when it returns be put on the seller solely or jointly with the buyer or return as before, changes in Capital Gains Tax levels in line with Inheritance Tax and income tax and possibly agricultural property relief is going to come under the Inheritance Tax microscope.
In summary buyers will continue to be racing to find properties and complete purchases to avoid extra expense, money they could otherwise use as deposits or improvements to their new homes. It is going to be a hectic five months, whilst we get these transactions put to bed and then I am afraid it is wait and see. If there is one thing we have learnt during 2020 it is to take each week as it comes.