A lot of commentary currently exists regarding the state of the UK residential market during and post the Coronavirus pandemic. We must recognise that the residential market is currently frozen. With Government controls currently in place minimal transactions will be able to occur during Q2 for 2020. There is undoubted going to be a period of economic uncertainty caused by restrictions on day to day life, the stock market fall and a negative impact on earnings caused by job losses/etc. Savills are currently forecasting a short-term fall of 5-10% in terms of sales values, with Zoopla forecasting a 60% drop in transactions.
Given these unprecedented times it is important to identify some positive messages we can give.
- The downturn is widely forecast to be short term, with Savills forecasting a potential recovery being seen in Q4 2020
- Will good buying opportunities be presented? During 2019 due to market uncertainty over Brexit the residential market had already begun to slow, with Knight Frank showing a growth in sale prices in 2019 of 0.7%. If you take Central London as an example Savills stated that there had already been a fall in values of circa 20% between 2014 and 2019. The residential market in key locations will return, potentially swiftly, therefore providing investors with cash reserves the opportunity to buy and make short term profits.
- One sector which always performs with greater activity is the Affordable Housing sector. As in 2008/9 organisations such as Housing Associations will be inundated with opportunities to buy land and stock units at discount prices. Due to the uncertainties being caused by Brexit some prudent developers had already positively embraced this sector, taking certainty over potentially higher profits. This will now be well placed, and this trend will only continue thereby increasing the amount of much needed social housing in the UK.
- One of the most positive aspects is the re-evaluation of our lifestyles and how we work. Many individuals and firms will be evaluating how they live and work. One aspect is the use of video conferencing and that it works, providing great efficiencies for both employer and employee. The need to bring multi-disciplinary teams together at great cost has gone. People can work much more efficiently and with reduced stress given the reduced need to travel. This will only be positive in terms of people’s personal well-being and the environment.
- The realisation that working remotely works is going to affect attitudes, with possibly greater working from home. This will have affect on all our lifestyles and demand for offices and support industries. Will where we live be affected? I have heard over the past few weeks several parties involved in the residential sector referring to the ‘flight to the countryside’. With modern working, do people now need to live in cities? With the advent of remote working this need is not so strong. Will people therefore look to the relocate out of the major cities into rural/small towns where often a greater quality of life can be achieved? This would not apply to everyone but the times we are in will lead to people questioning their lifestyles, with changes being considered.
At present we are all focused on getting through this horrific episode in our lives. We will all no doubt experience changes to our lives. However, in these times I just felt it was important to see that some positives could arise. The way we work has probably changed forever and once over it will be interesting to see how our lives change.