The housing market often suffers whenever the economy is under pressure. We asked Neil Maxwell of Fry & Kent for his observations of the local property market, both now, and in future months. Plus Chris Holden of At Pace mortgages, talks about the chances of getting a mortgage during the current crisis – and how long those mortgage holidays might last?
The housing market by Neil Maxwell
A regular question I’m asked at the moment is what’s the state of the housing market? Irresponsible media appearances, by so-called housing market experts, have been infuriating. Recently, a pundit stated that sales are down by 85% but failed to mention the fact that all estate agents have been told not to carry out any viewings. The truth is, unlike 2008 and the great financial crash, when the market just simply stopped, we have a large and growing number of clients waiting to view properties once conditions allow. We are not seeing large numbers of clients withdrawing from transactions already in progress, in fact, we have agreed on several sales from pre-lockdown viewings and one from a video tour.
As a business, we watched intently the unfolding pandemic in China and with the first cases of Covid-19 being reported in Europe, we acted swiftly to prepare ourselves to operate remotely, with colleagues working from home two weeks before the official lockdown. I have been to work most mornings to give keys to contractors carrying out essential maintenance for our rental portfolio. Being alone in an office that is normally so vibrant and full of life has been strange, but it’s been reassuring to see passing pedestrians taking an interest in the properties advertised in the window. With so many people at home, our activity reports from On the Market and Rightmove show an unbelievable level of traffic. The number of email enquiries we are receiving has shown a marked increase and we are keeping our viewing waiting lists updated – ready for the day we are able to conduct viewings once again.
Being a child of the Seventies I remember a time when everyone greeted each other as they passed by, it’s been a delight to see a return of this habit as I take my walks along the seafront, although sadly I don’t think we will be shaking hands again for a long time. And although many people isolated at home are complaining they need a haircut, I don’t think my hair is going to grow back anytime soon!
March was the Fiftieth anniversary of Bill and Rosemary Fry opening the doors of Fry & Kent Estate Agents and we are looking forward to the day we can open them again and welcome our customers back to our offices. May I wish you all health and inner calm to help us all persevere with these uncertain times.
Mortgages by Chris Holden
Six weeks that have changed the world, will it ever be the same again? Is the economy going to do a V, a U, or an X,Y, Z – we really don’t know. But when it comes to mortgages and house moving – one of the biggest cogs in our modern economy, I think we will get back to some sort of normality fairly quickly.
In the first few days after lockdown, lenders scrambled to withdraw products from the market and cancel valuations. Many estate agents shut up shop with staff furloughed and solicitors struggled to work from home, especially as many of them still depend on paper-based files, rather than on-line systems.
We are now, however, starting to see signs that the industry is adapting. As of today, whilst less than a handful of Lenders will offer a 90% loan to value, mortgage, there are plenty offering support at 85% for re-mortgages and purchases. Valuations are being done remotely – using systems which compare information from websites like Zoopla and RightMove – or, if a valuer does need to visit, they will ensure this is done with masks and gloves being worn and social distancing respected.
In the longer term what will be harder to assess is the impact on the housing market with an inevitable increase in unemployment and a possible recession. We are a nation where more people work in the service industries than manufacturing and it is these jobs which will be hardest hit – there will be fewer shops, fewer pubs, fewer restaurants and fewer people visiting them. This will impact both house prices and rental income. By how much, it is too early to say, or even have an educated guess.
All that said, there are reasons to be optimistic. Borrowing money has never been cheaper – fixed-rate mortgages are, and will remain, available at less than 1.5%. Southsea remains a popular place to live, with the renovations of both the old Knight and Lee and Debenhams buildings likely to give the town a further boost in the next few years. And people are adjusting to the ‘new normal’ – as a broker, I have had more enquiries about house purchases and re-mortgages in the last two weeks than I had in the previous month, as people start to see some cause for optimism.
There will be issues to overcome – how will Lenders consider missed payments during the pandemic? Will they discount, or offer further mortgage holidays once people have resumed work in some capacity? How will the self-employed be treated if 2020 accounts are significantly worse than previous years? All these questions will need to be answered as the year progresses, but I’m sure lenders will be sympathetic to borrowers circumstances.
I suspect the summer – assuming we have no second wave of infections – will see a surge in activity as a business that has been delayed, begins to take place. After that, we will have to wait and see what the long- term impact might make on our house prices and monthly rent. What hasn’t changed is that we remain a small city, on a beautiful small island and we all have to have somewhere to live.