Written for reallymoving by property expert Kate Faulkner.
It's hard to know whether moving is the right thing to do in the current situation.
Historically, we've been through recessions and have the data to tell us what happened to sales, purchases and prices, both in the 1990s and during the credit crunch post 2007.
However, we have not been in a situation where people are asked to ‘stay at home’ for up to 12 weeks and the whole country has been put in lockdown. The only data we have to draw on is what has happened in other countries to date, which is currently inconsistent.
In addition, there is the question of whether moving is ‘essential’ during this time.
Is moving in 2020 ‘essential’?
This is likely to depend on your circumstances. Most people move because they are:-
- Getting married
- Getting divorced
- Having children
- Have debt
- In response to a death
And there are other reasons too, for example an elderly relative moving into a care home or needing to be in a more accessible home.
If you think that your move is essential at some point this year, you can still put your property on the market, even if you can't move until after the lockdown is over.
This will help movers gauge the level of interest and even if we go back into a lockdown, people will still be able to view the property, ideally via video and from drive or walk bys. Gaining knowledge of how popular your property is can be really useful when planning your move and hopefully people will want to book a viewing as soon as they can.
If you are buying, it’s the same, but bear in mind there may not be a lot of stock to choose from. However, if the property for sale is your dream home, it may be better to see if you can secure a deal as soon as the lockdown is over rather than wait and lose the property into the future.
What if prices fall?
We know that property prices rise, fall and level out over time. No one wants to buy and then see the price of their property fall, but those moving home need to know it can happen at any time.
During a lockdown, property prices can’t rise or fall as no transactions will be able to take place unless they have already exchanged.
As soon as the lockdown ends, some people will try to secure a ‘bargain’, while others will just want to secure the property of their dreams and be happy to pay a fair price for it.
During the credit crunch, prices fell by approximately 20% and the number of sales fell by around 50%. However, we have a completely different set of circumstances in that securing mortgages was the key difficulty during that time, coupled with the recession that followed.
During this pandemic, one of the benefits is that mortgage rates are now at 0.1%, a historic low. Lenders are not only offering a mortgage ‘holiday’ to borrowers, but they are also not able to carry out any repossessions – the latter of which can be a big contributor to prices falling. However, currently lenders are limiting offers to 60% LTV (loan to value) meaning you'd need a 40% deposit. This may change after lockdown ends.
The property market issue at the moment isn't the usual miss-match between supply and demand, but instead we have a market which can’t operate at all.
What is likely to happen is an increase in the pent up demand we’ve experienced during the Brexit uncertainty.
Up until March 2020, we had a buoyant market as people began feeling more confident. As soon as the lockdown is over, if confidence in the market returns and people are still financially able to buy, the demand will be higher than supply once more. This may drive prices up in the long run.
How can movers make a decision?
Whether you buy now or later, there is likely to be a cost implication of putting a roof over your head. This might be continuing to rent or staying with friends and family.
To move during general uncertainty, you need to make sure you are financially stable and it's worth asking your lender or broker about insurance that can help you afford your property if you are sick or lose your job.
You also have the additional protection during lockdown of the possibility of a mortgage holiday and the fact that lenders cannot carry out any repossessions, but beware any monies will need to be paid back at some point and you may end up paying more in interest.
Finally, it’s down to whether this is your dream home and how long you intend to stay in the property. During the last recession, depending on where you live and your property, on average it took 5-10 years for property markets to recover, so typically, over the long term property prices recover, but a short term move might not be worth the risk.
Please note: this information relates to choosing to start or continue the house buying process. If you are at the end of the house buying process, please refer to government advice regarding continuing your move. All but absolutely necessary moves should be halted, and you are only able to move into your new property if you have already exchanged and the property is already vacant.
Please continue to check the government site for updates on home moving during lockdown
If you have a question, we are happy to give you an expert, accurate answer, just leave a comment.
Please note: This information regarding the moving industry and Covid-19 was accurate at the time of publication (25.03.20 at 16:00 hrs). Government recommended action is changing constantly, and we will endeavour to keep these articles up to date.
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