Will there be a second lockdown? Well, that's up for debate but with the media reporting that the UK has now reached a ‘critical point’ of the coronavirus epidemic, it’s important that we don’t get ahead of ourselves and bask in the growth of UK property prices all too soon.
While demand across the property market in England has shot up 88% post lockdown (Unbiased) and asking prices on Rightmove have surged 2.4%, let’s face it, none of us actually know how long this mini boom will last, and in the event of a second lockdown, if it’ll continue. So if you ask us, getting too wrapped up in the ‘mini boom’ bubble without considering the bigger picture could prove to be a major school boy error, whether you're a buyer or seller. Why? Clue’s in the name.
You see, unlike your standard economic boom, which occurs by growth compounding over time, the MINI boom's a short term fix for the housing market that's been created mainly by the introduction of the Stamp Duty Holiday. This means that, unlike the typical market boom, the MINI boom isn't supported by years of solid growth; as we all know, markets with little or no foundations are often a lot more volatile and more sensative to disruption - (cough) a second lockdown, perhaps?
So with this in mind, would a second lockdown in the UK see property prices plummet? Or, should you just brush all your worries about a bad UK property price forecast under the carpet and sell your property now while prices are high? Find the answer to this and more below…
Want to know something specific about how a second lockdown could effect property prices, or other parts of the property market? Use the menu below to find what you want to know, fast!
- Is the UK going into a second lockdown?
- What procedures are being taken to curb a second wave of coronavirus?
- What would be the effects of a second lockdown?
- What will a second locokdown mean for UK property prices?
Tough question – you see no one knows.
However as we write this blog, all the signs do suggest that a second lockdown is still very much on the cards.
Today, the UK Prime Minister, Boris Johnson, will address the nation to announce more stringent lockdown restrictions, which are rumoured to tighten the freedoms of the recent months.
This comes after England’s Chief Medical Officer, Professor Chris Whitty, and Chief Scientific Adviser, Sir Patrick Vallance, warned that cases of COVID 19 in the UK are close to doubling every 7 days, which could lead to the amount of daily cases hitting 50,000 next month!
But, while precautions like this do mean that the whole COVID situation in the UK is far from over, it doesn’t necessarily mean we’re heading straight for a second lockdown – the government admitted earlier this month that a second lockdown would be Britains ‘Last Chance Saloon’. Presumably then, we're likely to see more soft measures being put in place before a second lockdown is actually the case.
After a speedy sale before the threat of a second lockdown becomes more likely?
In an effort to avoid a second lockdown, ministers are toying with the idea of various preventative lockdown procedures. Here's a few that we think you ought to know about…
Circuit breakers are periods where there will be quick spurts of tightened restrictions, designed to do much like their name suggests, break the circuit. Basically, reduce the rate of transmission over a short period of time to prevent any sudden spikes spiralling out of control, and potentially overwhelming the NHS.
What this means is that the hospitality sector – so that’s bars, restaurants, pubs, gyms etc. – could be closed for short periods of time. While schools and workplaces (for the most part) will remain open - working from home during a circuit break will likely also be advised. The idea being that by doing so number of cases/ deaths will drop and avoid the UK entering into a second lockdown.
Curfews and/ or closures for pubs & restaurants
With close contact being one of the most common reasons behind COVID infection, it comes as little surprise that introducing curfews or full closures across the hospitality sector is another strategy the government is considering as a way to curb a second wave of the virus.
Since restrictions were loosened, it’s become evident that alcohol and social distancing don’t go together – that’s unless you’re a light drinker of course. But even then, you’re still at a higher risk thanks to others around you who choose to exceed their limits. For any drunk person, social distancing is the last thing on their mind, which is probably why it’s rumoured that curfews and closures could make a HUGE difference.
Kind of ironic though when you consider that only the other month we were being encouraged to ‘Eat out to help out’, but eh, we won’t open that can of worms just yet – one for another blog, maybe?
Policed lockdowns is basically a posh way of saying that contact tracers – those charged with tracking the people who should be isolating – will be making regular check-ups to ensure that isolation requirements are being met.
Come September 28th and anyone who tests positive for the virus or is told they’ve come into contact with the virus via NHS Test & Trace, will have to self-isolate for 14 days. Fail to do so and you could face fines of up to £10,000!
Local lockdowns are much like you would imagine – a localised version of lockdown to reduce the spread of the virus within a certain area. For many parts of the UK these have already been put in place. Bradford has been plunged into its second local lockdown today, as has Birmingham and Preston, while cities like Leeds and Sheffield remain high on the coronavirus watch list.
A second Lockdown
And then there’s of course going back into a second lockdown – a move the government’s calling our “last line of defence”. From what we can gather, a second lockdown would be much the same as the first, only it’d be more strategically thought out and be communicated to the public ahead of time (or at least we hope it will).
It’s worth noting that a large part of the economic downturn caused by the previous national lockdown likely came from the abruptness of the decision. Providing the government learns from its mistakes and gives businesses time to prepare for a second lockdown, we’d assume that at least the economic impacts could be somewhat less dire.
So you get a clearer idea of why a second lockdown could still be a possibility, here's a few stats to show you how COVID cases in the UK look so far...
*All credit for the above stats goes to The Guardian.
Has lockdown MK1 changed what you want from a house? Sell your house fast, today
Ask us and a second lockdown could significantly affect the future property market - the extent of which you should be able to gauge through any changes in property prices. Here's three consequences of a second lockdown that we think would have a particularly high impacts on house prices...
A second lockdown means less property viewings
The first, and probably one of the most obvious ways in which a second lockdown would affect property prices, is by restricting the amount of viewings that are able to take place.
As we all know, buying a property is a HUGE commitment - in fact it’s probably the largest many of us will ever make – so it’s only natural for us to be eager to see what we’re buying in person, before submitting an offer. Hence why viewings can often ‘make or break’ a property sale.
Not only that, but they’re also a good chance for buyers to suss out a property's sellers and get a feel of what they could do in the way of renovations. Take viewings away and the experience for buyers becomes a whole lot harder, as pictures only tell part of the story – particularly if they’ve been shot with a wide angle lens and given the once over by a Photoshop wizard.
This is why we suspect that in the event of a second lockdown, virtual viewings become the new ‘must have’ when it comes to property marketing. In many ways they’re the best of both worlds and do a good job of bridging the gap between a set of pictures and a physical viewing. But will buyers trust them as much as their own eyes? Likely not.
A second lockdown means potential job losses
If lockdown MK1 was anything to go by, entering a second lockdown would also see the jobs market take a considerable hit. Previously, the lack in custom saw a large proportion of staff made redundant, either because of business cut backs or them shutting down altogether. And as you’d expect, from this came various knock on effects.
The most immediate was that numbers of proceedable property buyers slumped. By proceedable, we mean buyers who are able to progress with a purchase. A lack of regular income left many buyers unable to secure a mortgage, as their lack of income (even if they’d come from a high paying job), turned them into a high risk for mortgage lenders. And as any avid readers of our blog will know, mortgage lenders do not like risk!
Things were much the same with proceedbable buyers. Instead of making a purchase while competition across the market was low, the majority chose to hold out on a purchase until the end of lockdown – hence the mini boom.
As a result, this meant the market during lockdown played out a lot like this…
Less buyers = less competition = less interest and competitive bidding = lower/ fewer offers
But there is hope in the event of a second lockdown. As a consequence of lockdown MK1, businesses should be more prepared for the lockdown way of working and be able to adapt more easily.This could be cafes switching to deliveries or professionals working from home instead of the office.Precautions that as we've learned above, could reduce job losses and business closures during a second lockdown, which should help to ease the affects on house prices.
INVESTORS: Thinking of trimming down your portfolio? We've got you covered.
A second lockdown means slower property sales
Selling a property is one thing but getting it sold is another kettle of fish, which in the case of a second lockdown, could take some time. Not that this would be much to do with a cash property buyer like ourselves, but more those in property services – so that’s solicitors, conveyancers, surveyors etc.. Why would a second lockdown make life hard for them? Jump into the scenario below...
You've sold your property and your solicitor is looking to transfer your title deeds over to your buyer. So, as a solictor would, they reach out to your lender (the ones who keep hold of your deeds if you have a mortgage).
After 5 minutes battling a with an automated robot, they finally get through to the right department, only to be told that the person they need to speak to is working from home because of the second lockdown and can't access the necessary resources.
But, determined to progress your sale they soldier on and instead reach out to the other solictiors in the chain to push through some enquiries or get back the results of any outstanding searches.
Two weeks go by and they still haven't heard from any other solicitors in the chain - reason being they've all been furloughed and in all the excitement have forgot to put on their 'Out Of Office' to say that they're currently away from work. You're solicitors now at a dead end - congratulations, your sale's now in limbo.
So, what with all this disruption, it's not hard to see why property sales will take longer during a second lockdown. Communication is key to any property sale and if you haven't got it, then it's likely you'll lose out. A lack of communication due to a said 'limbo period' could also cause weaknesses to appear in a property chain. All of which could lead to a chain break and cause a sale to fall through - not ideal!
Okay, so let’s get down to business - are property prices falling in the UK?
Not yet, but it’s likely that they could do in the near future. Recent studies by the Centre for Economics and Business Research, one of the country’s economic think tanks, have predicted the UK property market could take a swooping dive come 2021, falling by as much as 14%!
In their words: “Our analysis suggests that prices will start to fall significantly towards the end of the year, and the first half of 2021 – though there might be a short spike as the stamp duty reduction comes to an end – with average house prices forecast to be 13.8% lower in 2021 than in 2020.” (Gulp!)
Sound familiar? Well, that’s because in essence it’s the point we made at the start of this blog - the unsupported growth of the mini boom has made the UK housing market fragile and sensitive to any disruptions. In the case of the above, this would be the end of the Stamp Duty Holiday.
And speaking of disruptions, it’s also worth remembering that the predications made by the think tank DO NOT take into account a second lockdown. Factor that into the mix and the future of the UK housing market may not be all the sunshine and rainbows that estate agents will lead you to believe. You see, while a second lockdown is at the moment unlikely, it isn’t in any way crossed off the list.
A point proven when the health secretary, Matt Hancock, refused to rule out a second lockdown on the basis that the UK is now at a “tipping point” in the covid pandemic. So this beggars the question, if the think tank is right and UK house prices will fall 14% next year without a second lockdown, what would happen to market if a second lockdown were to occur? Would it slump even further?
Ask us and we’d say that yes, it could well do, which is why selling your property now while prices are healthy, wouldn’t actually be a bad idea - providing you can get it sold fast. Being on the open market when values are falling is never a good position to be in. Here's why...
As everyone else reduces their asking price, your property is quickly labelled as ‘overpriced’ unless you follow suit. With such a sigma over your property’s price, you’ll struggle to generate much, if any, serious interest. And even if by some stroke of luck you do, chances are you’ll be hit with a cheeky bid. The reason why is simple.
By reducing your property on the open market, you’re basically saying “I’ve tried for my fantasy price (i.e. overpriced my property) and it hasn’t worked. I’m not entirely sure what the actual value of my house is, so I’m just going to keep reducing and hope I get lucky.” An attitude that can quickly turn a buyer’s pupils to pound signs and leave you with two choices - take your house off the market and foot your agent’s withdrawal fee, or sell for under market value in a falling market. Not ideal!
So, pardon us for being blunt but, why bother with the hassle?! Surely selling your house for a fair price while the property market is strong will prove to be a far more beneficial solution, right?
You see, as a cash property buyer, we recognise the importance of speed when selling, which is why we can tie up a sale and get you on your way within just 7 days. And no, that’s not 7 days to make an offer - that’s 7 days from offer to completion.
And if that's not enough, we also cover your legal fees and guide you through the process from start to finish, which as you've probably twigged above, isn't that long at all.
You can’t say fairer than that! Start your quick property sale today!