The economic effects of a pandemic on a modern economy are unclear. In unprecedented times there’s no comparative data that can be called upon to deliver a reliable algorithmic trend to predict the future.
Instead it remains somewhat of a guessing game.
What we do know, however, is that the effects of COVID-19 have reverberated right across the economy from housing to retail and everything in between. Many economists believe that we’re heading for a depression. But depression doesn’t always mean doom and gloom; it’s a time where inventiveness, adaptability, and human resilience are required in copious amounts. You only need to look at history to see that boom always follows bust; it’s just a question of good-decision making by those with their hands on the levers of power and time.
The most recent economic downturn that hit the property market was in 2008. Banks more or less closed their doors as the credit crunch hit hard. Getting a mortgage was nigh on impossible, property prices tumbled by over 20% and transaction levels slumped. The industry was on its knees and change had to happen for it to survive — auctions, online agents and cash buying companies became more popular, the government introduced new laws to help things move like no stamp duty and help-to-buy schemes for first-time buyers, and the bank of mum and dad became increasingly important. Six years later the property market was more or less back to pre 2008 levels.
2020 is different. This time there’s no credit crunch.
In fact, credit is in plentiful supply with governments across the world pumping money into economies and banks lending left, right and centre.
The incentive to sell house fast is strong amongst certain buyers.
From an increase in relationship breakdowns in quarantine, to higher mortality rates and increasing levels of debt as a result of the virus, COVID-19 has been a selling catalyst.
How this will play out in practical terms is still somewhat unknown. The initial signs are good, however, with the partial re-opening of the property market at the end of last month releasing pent-up demand. RightMove recorded its highest ever levels of traffic last week on 27th May with over 6 million visits. Plus over a quarter of people (28%) who were not planning to move before lockdown are now entering the market and increasing demand for properties.
One of the biggest unknowns of the pandemic is the effect that it’ll have on where people want to live. With outside garden space anecdotally becoming the most valuable asset of 2020, there has been a surge in demand for properties in coastal areas like Devon and Cornwall. Further, as working from home becomes the new norm Northern cities (like Manchester, Wigan and Hull) are seeing a boost in interest as people realise that they can get more bang for their buck.
The challenge for estate agents is dealing with this ‘surge’ in enquiries especially as social distancing still needs to be observed — there are less staff to answer the office phones and viewings are a lot more complex.
This adds up to estate agents moving slower than they usually do. And let’s face it, they aren’t known for speed with pre-corona timelines to sell a home on average around 6 months. The problem is that the unknowns before the pandemic remain; from buyers losing interest to a property chain collapsing and gazumping, the list is endless. In unprecedented times, looking for alternatives if you need to sell quickly is creative and productive rather than detrimental.
Like after the financial crash in 2008, cash buying companies saw a surge in demand. And it’s no wonder — they can exchange within 7 days and with immediate access to funds they can buy with cash. It’s likely to be a similar story this time round. Yes, you might get slightly less than market value but the sale is guaranteed once prices are agreed and you can move quickly. And for many, it’ll be speed that matters most in the coming months.