Closing the housing market “will kill any flicker of economic recovery just as the population begins to feel the pharmaceuticals coursing through their veins”, says leading property expert.
Despite everything that 2020 threw our way, the housing market was admirably resistant. Instead of wilting under the pressure of Covid-19 and lockdown, it has thrived, sparking a period of winter activity that the industry rarely, if ever, sees. As a result, demand is now greater than the market has capacity for and the average house price is, for the first time, well over £250,000.
However, as of today, January 4th, 2021, it seems likely that another nationwide lockdown is coming our way. What does this mean for our chances of buying and selling homes over the next few months?
Last time, the agents kept working
During the first lockdown in Spring last year, the housing market managed to remain open for all but a few weeks. During this period, transactions dropped by 90%, serving a devastating blow to the health of the economy.
The government quickly realised that the industry was vital for keeping the national economy’s head above water so took extreme measures (stamp duty holiday) to keep it churning.
The impact of the tax-relief has been amazing, doing exactly what the government hoped it would. So, with a second lockdown on the horizon, should we expect more of the same, or will this time be different?
Covid cases are getting out of hand
There is a real sense of concern at the moment, perhaps even more so than last time around. Covid cases are rising at a blistering rate and with a new strain of virus now out and about, a strain which many say is more contagious than the original version, it’s possible the government reaction will be more panicked than last time.
The pace at which the virus is now spreading, or at least is reported to be spreading, means immediate action is required. The government has tried the regional tier model and it isn’t working well enough. Lockdown is almost inevitable.
Assuming it happens, what are the possible outcomes for property?
Worst case scenario
First, the bad news: During the first lockdown, the government had a certain confidence that the general public would play their part in curtailing the virus. This meant that they could keep the housing market open, albeit with strict virus control measures in place, confident that our communal ‘blitz spirit’ would make us cautious enough to keep certain aspects of the economy up and running.
This time, however, there is the danger of lockdown fatigue. To put it bluntly, people are less likely to strictly follow Covid guidelines this time around because they’re fed up, it’s been going on for too long.
The government knows this, so the question is, do they trust us enough to abide by the social distancing rules in our daily lives in order to make it relatively safe for homebuying to remain legal?
If the public behaves as the government wishes them to, the infection rate should drop off quite quickly, thus helping the government remain confident that keeping the housing market open can be done safely. But if the public doesn’t behave as the government wishes, the rocketing infection rate could lead them to believe that the risk of keeping housing open is far too great to be called responsible leadership.
But we cannot afford to lose the housing market
Having said that, it’s also reasonable to assume that the government will do everything it possibly can to keep home buying and selling going through another full lockdown. Now, more than ever, the economy needs bolstering. Boris et al will consider it a very dark day indeed if they have to halt all property proceedings.
Luckily, estate agency and conveyancing are things which are relatively easy to proceed with while abiding by strict distancing rules. It’s safer than schools, safer than the office, and certainly safer than shops, pubs, and restaurants because it is not an industry which relies on large crowds of people being penned in together.
Using a combination of modern technology and astute planning, the house buying and selling processes requires very little personal interaction beyond two or three people at any one time. This makes it a minimal threat to public health which means it should be near the very bottom of the list of industries which need curtailing.
Our in-house property expert, Russell Quirk, has been a constant voice of support for keeping property open throughout the pandemic, and his opinion has not wavered.
“It’s vital that the market stays open,” he says. “Any pulling up of the drawbridge will kill any flicker of economic recovery just as the population begins to feel the pharmaceuticals coursing through their veins. The housing market underpins the wider economy. Let’s hope that Rishi Sunak remembers that.”
As we move tentatively forward into the new year, much remains to be seen. But one thing is for sure: if the government wants our nation and its economy to survive this truly existential threat, the housing market simply must remain open. Anything else would be a sign of surrender at the worst possible moment.