Housing market remains open despite 'Lockdown 2'! Here's why...
Lockdown. As if the first one wasn’t enough, now we’ve got 'the second wave' to contend with. Only this time around, Lockdown 2 (as it's been dubbed) comes with whole host of U-turns - a manoeuvre Boris seems to be becoming rather fond of. Saying that though, his U-turn with the housing market has taken many of us by surprise. A pleasant surpise nevertheless.
Announced by housing secretary, Robert Jenrick, shortly after Boris addressed the nation on October 31st, the new lockdown rules state that businesses across the housing market CAN still operate during the second lockdown. A sign that the government has learnt from their mistakes, perhaps?
But, whether this will remain the case as the 'second wave' develops is another matter. Ask us, and if the level of COVID cases continues to rise, restrictions may tighten to somewhat resemble those of Lockdown MK1. So, why do we think Boris would make a U-turn... on his U-turn? Read on to find out...
Here for something specific, or just curious why the UK housing market will remain open during Lockdown 2?
So, what is the second lockdown? And how does it differ from lockdown MK1?
The second lockdown (AKA Lockdown 2) is the government's latest response to the rising levels of Covid cases across the UK; as we write this article, the figures show cases to have shot past 25 thousand per day (Yikes!).
The second wave of restrictions came into force on November 5th 2020 and (as of now), will remain in place until December 2nd. Those eagled-eyed readers will have noticed that this is nowhere near the length of the lockdown we experienced in the Spring, nor as restrictive.
Children will be encouraged to go to school, public parks will remain open, care bubbles can be expanded and as you know, even the housing market has been given a breather. So this beggars the question, is this 'watered down lockdown' even a lockdown? Or just Tier 4 in disguise? Or does this name symbolise that there's tighter more lockdown-esque restrictions to come?
Could the UK's second lockdown be extended?
Well, that’s up for debate... but, according to Michael Gove it could well be.
In an interview with Sky News, Gove stated: “We’ve got this four-week period, during which we’re going to review progress, but of course we’ll always be driven by the data.” Gove continued by saying “We will always take a decision in the national interest, based on evidence.” When asked specifically whether this could result in an extension to Lockdown 2, he said “yes”.
However, doing so won’t just happen overnight (or at least we hope not). Extending the lockdown would require the government to have sufficient evidence, as Gove says. This could be that the level of cases aren’t showing signs of falling or that deaths have seen a sudden spike. We’ll likely hear more on this in the next couple of weeks.
NOTE: Bare in mind that with accuracy and frequency of testing improving fast, the level of CASES may not drop as far as you’d think.
Why is the housing market open during the second lockdown?
Why has the housing market remained open during the second lockdown, especially when other sectors like retail and leisure have been forced to close, just like in the Spring? Hardly sounds a fair, does it? But that's not to say there isn't at least some method to this madness.
Here's just a few reason why we think the housing market is remaining open during the second lockdown...
Prevent a drop in property values
Demand determines all value.
If the demand for a product is there, its value typically increases at a similar rate. It's this simple formula that's kept the housing market buoyant (and prices healthy) pretty much ever since the economy recovered from the financial crash of 2008.
So when you fuse the UK's population growth, now projected to surpass 70 million in 2026 (Gov UK) with a pool of first time buyers that's larger than they were in 2007 (The Independent), the market becomes heavily reliant on a certain base level of demand.
Think of it as a your appetite. The more you eat, the more your stomach expands and typically the more food you need next time around to satisfy your hunger.
Keep growing your appetite and very soon you'll be reliant on twice as much, maybe even three times as much food to get that 'full' feeling.
All very well as long as you have enough food (i.e. demand) to satisfy your growing hunger, but if you were for whatever reason forced to go without (i.e. have your demand capped), then the sudden scarcity would cause your stomach to adapt (shrink).
Now there will be those of you reading this thinking, yeah, but what about pent up demand? Surely bringing the market to a halt would only hold back the demand until after the second lockdown, right?
Just like how you'd devour your first meal once you managed to break free of hunger strike.
Well, while there's no denying that to some extent this is true and that you could see a slight surge as the market reopens, (i.e. regains its appetite), if you ask us there's more to it.
HINT: There's a good reason we say the surge would be 'slight'.
That reason is the immediate impacts.
You see if the second lockdown were to be equally as tight as the first, and the housing market were to close, there'd likely be a LOT of knock on effects. One of the main reasons why the government introduced the Stamp Duty Holiday straight after Lockdown MK1.
Here's 2 we think you ought to be aware of:
Businesses going under or job losses (regardless of the sector) could see less people able to secure a house repayments. Less proceedable buyers = less demand = lower sale prices.
Chains could break due to frustration over being in lockdown limbo, which would see many sellers re-routed back to square one and buyers far more hesitant over submitting further offers. Bare in mind, more supply is no use if demand has dropped.
But saying that, there won't just be a large portion of uncertainty across the market if it were to close.
Even with the current restrictions it's something that's very much present. After all, as we mentioned above, no one knows how long this second lockdown will last and whether restrictions will tighten any further. Not even Boris...
So there's no reason to extend the Stamp Duty Holiday
Pretty self explanatory.
If the government were to shut the market for a second time, it'd give us, Joe public, a strong argument for why the Stamp Duty Holiday should be extended, seen as though it'd been cut short by at least a month. Something that would only add to Boris's-U-turning reputation
Whereas, by keeping the Stamp Duty Holiday in play over Christmas, the government can at least say they've done their best to ensure demand remains strong throughout December. Let's face it, no one wants to be the prime minister when the housing market slumps, especially if it's during such a festive season.
Property sales involve very little social contact
Social contact is one of the main reasons behind Lockdown 2, as it's this that causes COVID to spread. However, if you stand back and look at the overall property sales process, the amount of face-to-face communication is actually very minimal.
You can list your property online. Conveyancing is also a very much internet and phone based affair, as is your actual property search itself. The only instance that we can think of where social contact may present a hurdle is viewings, but even the frequency of those is being reduced thanks to virtual viewings.
Define 'housing market' - does this mean EVERY part of the housing market will remain open?
As we all know, a property sale is complex ordeal, so saying 'the housing market is open' isn't actually much help.
Does that mean estate agents are open as usual? That you can still sell your property to a 'Sell House Fast' company like us? And what about solicitors? Can you still go in for a chat?
Wo Wo Wo - no need to get worked up. We've gone through all the legal documents, so you don't have to. Find out exactly what an 'open housing market' means below...
During lockdown 2, you can't:
Book a face-to-face consultation with a solicitor that isn't necessary. You're encouraged to do these virtually.
Viewing with an agent if you're not interested. You'll likely be asked to confirm your interest by looking a property's virtual viewing first.
During lockdown 2, you can:
Visit an agent's office or a developer's show house.
Go on viewings of residential properties with an agent, once you've confirmed that you're interested.
Move into a residential property and organise removals.
Carry out work on a property, be it you or a tradesman.
Visit a residential property to collect rent.
Sell your house within 7-days to a cash buyer, like us.
No, you read that last point right. You can cut all the hassle that comes with an open market sale and sell your property direct to us, for CASH! Be that now, during the second lockdown, or a couple of months down the line when your agent finally runs out of excuses.
Let's face it, in such a unstable climate, negotiating a property sale is the last thing you want on your mind, especially if you've already found your onward purchase. So why bother fretting? Our team have over 50 years experience in buying property and could have you on your way in less than 7-days!