The media and agents have presented an extremely positive picture of the property market since lockdown restrictions were loosened at the end of June. Sale prices are soaring, demand has increased massively, and people are getting on with life after a really tough time. But, that picture doesn’t tell you everything, and while this may not be the positive news that is being spouted elsewhere, it is important to hear.
Property viewing difficulties:
It has become an obvious reality that Covid-19 is not in any great rush to disappear from our lives. Day to day, we are all living with new challenges that were non-existent a year ago. In the property industry, I think this has most obviously impacted on property viewings. Many agents are having to work from home at the moment, communication with clients has become more difficult, however demand has remained. Viewings are by appointment only, and only one household can attend at a time. This will naturally lead to less availability on the part of the agent, and more inconvenience for the buyer. While the fact that demand is there is good for the industry, and the economy generally, it has led to instances where buyers have not even been able to attend a viewing before the property has gone under offer. You may be thinking that this is merely a symptom of a hot market, and that, even pre-covid people miss out without being able to view. This is true enough, but when the complaints come from chain free buyers with funding available, the question has to be asked whether the seller is really getting the most for their sale.
Transactions taking longer to complete:
The next point that isn’t shared by agents up-front is that, due to the level of market activity and covid restrictions, transactions can end up taking a lot longer to complete. Mortgage applications are hardest hit, with conveyancers waiting far longer than is typical to receive their clients mortgage offer. Working from home then makes legal work a lot more difficult as communication is strained. As such, there are still plenty of transactions that are falling through after an offer has been accepted.
First-Time Buyer demand is decreasing:
It has been well documented that FTB demand spiked immediately after the first lockdown ended. What is not being reported is the loss of momentum that’s come as a result of growing economic uncertainty, and reduced availability of higher loan to value mortgages. Demand from FTBs remains well above 2019 levels but has fallen back in line with pre-COVID levels. We expect it to decline slowly over the rest of 2020.
A more balanced view:
As Zoopla have documented this week, the strength of the Scottish housing market is being driven by a once in a lifetime re-evaluation of housing in response to Covid and the lockdown. Households are prioritising space and location as well as factoring in a shift in working patterns. Less time spent meeting friends and family in public locations has reinforced the importance of the home. At Evergreen Property, we believe that a second spike in new cases and a tightening of restrictions announced by the Government will only serve to support this trend, primarily for those households in more secure financial positions. So while FTB’s may suffer, the market as a whole will remain buoyant long into 2021. However, the housing market is not immune to any prolonged weakening in the economy and the impact of less Government support.
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