What Does October Have in Store for the Property Sector

First time buyers are being squeezed like never before. The first issue that they face we have mentioned many times, namely the analysis of deposits and sources of the mortgage deposit funds. Bank of Mum & Dad is under scrutiny like never before.

How’s October Looking?

A new month usually ushers in new targets and motivations.  October 2020 however brings a number of unique challenges that the property sector has not had to deal with previously, some related directly to Covid-19 and some due to the social and economic impacts of Covid-19.

It is widely recognised that many agencies have recorded outstanding sales and rentals in the last few months. Stamp duty incentives, easy access to low rates of finance as well as home workers looking to upscale or gain more space have all had a cumulative impact. But what does October have in store? Are things set to continue, or come crashing down  to earth as some predict 

Covid-19 – How Much of an Impact on Property Sales and Rentals Moving Forward?

It’s a grim reality that Covid-19 has shot to prominence again. Many suggested that the current huge increases in infections were inevitable, with schools and universities, pubs and restaurants as well as general restrictions being relaxed bringing so many people together. Without becoming overly political, one minute we were being paid to frequent pubs and restaurants, the next we were subject to curfews and home working again. Local lock downs are a reality.

If we are honest with ourselves, a vaccine is many months away from being administered, and who wants to be at the front of the queue. Could Covid-19 be around in 12 months’ time? We have already been warned it will be status quo for 6 months, so let’s not be surprised if elements of lockdown and distancing are still in place in Summer 2021. This means a continuation of current working practises at the very least. Property viewings may become an issue once again, as may access to properties for valuation and photography purposes.

These short-term issues can of course be overcome with PPE and social distancing considerations. How about the bigger picture though? As stamp duty incentives will remain into 2021 it may well be the other factors that have an immediate impact, i.e. the ending (or certainly the trimming down) of furlough, and access to mortgages. Indeed, mortgage products have tightened significantly in the last month already, especially at the lower deposit end as expected.

Already lenders are considering the impact of the inevitable mass unemployment, estimated to rise between 1 and 3 million more people pre-Christmas. Indeed, the business and economic sections of the broadsheets are currently a who’s who of blue-chip company failures and staff shedding. This process has started already, as forecast. Let’s also remember that economists are predicting the worst recession in a lifetime.

First time buyers are being squeezed like never before. The first issue that they face we have mentioned many times, namely the analysis of deposits and sources of the mortgage deposit funds. Bank of Mum & Dad is under scrutiny like never before.

Secondly, and not to be ignored, are the difficulties being experienced by people living in flats, and the requirements to have an EWS1 certificate to allow a mortgage to be granted. The issue faced by owners of flats over 6 stories high is going to take some unravelling (to be polite) and many first-time buyers are buyers of flats. When this end of the market slows down, the whole process up the food chain generally slows down.

Where Will Property Prices Head in 2021?

There are many forecasts and predictions about property prices, most of them indicating a sharp decline south. It would appear to be a question of just how much property prices will fall throughout the rest of 2020, after record asking prices being realised for the last few months. The worst forecasts see price drops of up to 15% next year, many forecasters being more hopeful at between 5% and 10% drops. Naturally this will impact on lenders but equally important, in buyer confidence.

So, where does that leave the industry for the rest of the year? We forecast fewer enquiries for both rental and sales. The abundance of enquiries over the last few months has led to a state of almost gluttonous apathy, and mystery shopping results from the property sector has revealed a lowering of standards in both response times and rates to enquiries. Needless to say, when buyers are back in control of the market, the sellers have to work harder to win their business.

So, as enquiries and sales decline, cloth has to be cut. Perhaps more attention will need to be paid to enquiries, advertising overheads and both marketing and staff performance.