How Will the Second Lockdown Affect the Property Market?

So here we are again in a second lockdown, which if honest doesn’t feel like it did back in March, but for all intents and purposes we are in the same situation. So today I felt it will be beneficial to discuss exactly where we feel the property market is heading, what the best areas are to invest in, do you purchase inner cities or outside of city centres, do you buy something completed to benefit from the Stamp Duty holiday and of course the main one, do you hold off investing at all until we see what the results of the vaccine are.

As always I do believe looking back is a good way to judge what is happening moving forward. The good thing is we don’t have to go too far back to the previous lockdown.

So let’s look at the market reports from April this year.

The Independent

Independent property market article

This is Money
This is money property article

Bloomberg

What Really Happened

record high property market article during covid lockdown

Screenshot 2020-11-13 at 12.12.43.png

So back in the webinar we hosted in April we categorically stated that a lockdown would not affect prices in the property market and would only pent up demand.

However, in that webinar we also stated that a second lockdown could change all of that. So we now find ourselves in a second lockdown and has our view changed?

Initially when the second lockdown was announced it was one of concern. Although we knew the fundamentals we always talk about (taxation, legislation, and mortgage rates) were not about to change, an outside anomaly could impact things short term. Confidence.

Confidence is a funny thing when it comes to the economy. Despite there being a set amount of funds in circulation (only the Bank of England can create more money by QE) if confidence is high people spend money, borrow more, therefore, spend more and the cycle goes on, if confidence is low people hold onto their money, spend less and a downward spiral takes place.

There was then an MP’s committee meeting buy the two heads of SAGE, Vallance and Whitty, gave what was very weak evidence backing up lockdown and of course the biggest plus of them all, the vaccine.

Now although the vaccine is not going to be some miracle cure it does give confidence, and as we have said above confidence is key. So it then comes back to the fundamentals and as we have said previously that we don’t anticipate they are going to change therefore we don’t see any significant changes in the market.

We of course do feel that the prices won’t keep increasing at the rate they have been and things will even out but all in all we don’t anticipate the scaremongering headlines we have seen previously.

Despite this, I would always be looking at below market value opportunities and we on your behalf will always be trying to get as much out of the sellers as we can to drive down the prices to protect you against any future dip.

Should I Invest Now?

Only you can answer that. Over the last 20 years since I started work in the city I have worked in two industries. The first is the financial investment industry with stocks and shares and the other is property. I remember a broker in my early days telling me the following.

  • Don’t try and guess the market short term and try and buy at the bottom you will simply end up waiting and waiting and missing the boat
  • If you don’t like the outlook over the next decade don’t look at it for 10 minutes
  • Property is a slower moving juggernaut and over the last 30 years we have seen dips but are we higher today than we were in previous years and the answer is yes
  • If the property market dips will you still be getting a return on investment? Yes you will so the price of your property is only relevant when you sell it

Where should I Invest?

Fashions change, we have seen a big increase in searches and purchases for homeowners living further afield with more open space due to lockdown. But the reality is within the next 12 months things will return to normal, workers will be back in the office and suddenly the commute from further afield places will become tiresome. They will then potentially look to rent somewhere midweek in city centers and I believe there is going to be more demand for city centre properties.

Over the years despite what we have seen happen politically and economically, we have always seen property prices grow quickest in city centres.