During or just after a global pandemic doesn’t quite seem like the right time to go swanning around viewing houses and putting cash on the table for potentially the biggest single purchase of your entire life.
In the UK, the pandemic has led to severe lockdown measures being implemented and the largest recession of any G7 country. As one of the key markets, many expect the property market to receive greater protection. However, there is no certainty that prices will hold true and the market could present a unique opportunity to so-called ‘generation rent’.
Of course, before we get into the semantics of buying a house while a virus is ravaging the world and our usual way of life, you need to first ask yourself the question…
Without trying to sound like a cop-out, whether you should be buying post-pandemic is entirely dependent on your personal situation.
This is an awkward and volatile housing market — as we’ll soon get to — and the UK has found itself deep in the midst of a genuine housing crisis for many years.
Sky-high rents in major cities and a lack of jobs in smaller towns and more rural areas has led to a generation of younger people struggling to find good accommodation and more importantly save the capital needed for a down payment on a property. This ‘renting-crisis’ is at best funnelling all property towards people who bought when prices were lower years ago (such as buy-to-let landlords) and at worst contributing to massive amounts of homelessness across Great Britain.
If you can afford to buy you’re probably facing less competition than ever before. It might not feel like it when you’re scrambling to match offers, but this is as close to a buyer’s market as the housing industry has been in years.
Many of the questions you should be asking yourself aren’t necessarily connected to the pandemic, but questions of job security, personal wealth and your own lifestyle preferences.
Are we looking at a good housing market?
The question people across the country are awaiting an answer for with bated breath.
There’s no doubt this is a very difficult time for the housing market. However, as a consequence of the pandemic, we are looking at a buyers market for the first time in many years. Buyers realise there exists legitimate potential to stumble across a bargain and sellers set on a move pre-pandemic will be in a significant rush to shift their property — willing to compromise and pushed by estate agents sniffing out a market full of uncertainty.
Many of the most popular property sale portals such as Rightmove and Zoopla have reported heavy traffic throughout the pandemic (particularly the lockdown period). Part of that will be individuals and couples browsing new houses out of boredom and curiosity — however, many will see this as an opportunity to take a risk, try something new and kickstart their dream move before a potential second spike hits and the financial situation worsens.
Are these the signs of a good housing market? We’re hesitant to say yes — but there’s no denying there is a unique opportunity here.
Okay, so how are prices looking?
Despite accusations that lockdown procedures left us with a ‘non-functioning house market’, prices as a whole have not been drastically affected.
Yes, we are looking at the largest price fall for ten years — with most experts predicted somewhere between a 2 and 7% fall in price throughout the rest of the year — there are just as many experts foreseeing this as less of a permanent drop and more something that will reach usual levels again.
The stamp duty tax has been put in place to keep prices steady and a quick return to the buyers market in June has left the industry with hope of a swift return to normality.
However, a swift sharp recession could potentially lead to further drops than anticipated, as could a no-deal Brexit.
What’s this stamp duty policy?
Announced by the chancellor Rishi Sunak in July 2020, the stamp duty holiday gives homeowners whose main property costs less than £500,000 exemption from the stamp duty tax until March 21st 2021.
While this won’t necessarily give a leg-up to anyone not already on the property ladder, it will afford those who have recently bought a property or are thinking of buying some relaxation going into the new year.
Before the exemption, this tax was paid on properties of £125,000 or more.
Am I making a good investment?
Once again, that’s a question you can only answer yourself.
A good investment depends entirely on the quality of the property (potential to sell on, etc) and your own personal financial situation (debt, job security).
This is a unique time to buy with its own complications — there’s no denying that. There are stories of the process being elongated by sellers struggling to move into their new property and likewise, stories of the pandemic pushing through moves quickly with estate agents eager to get the deal done.
Property is one of the most vital commodities around. It will never be a bad investment because of the role it plays in major world economies. However, some investments are better than others.
There is no checklist for buying a house unique to the pandemic and no way to be sure of your decision until you’ve made it. It’s all a matter of personal finance and job security right now — much more so than house prices and availability.
The best thing you can do is be acutely aware of your financial situation and not rush into anything — while following the proper procedures of buying a house. Good luck!