As a property developer, buyer, seller and owner I always have my eye on what’s going on, picking up stories in the property press and interpreting what might happen going forward. However, right now, I hold my hands up and have to admit the housing market and house prices – whether sales or lettings – has me absolutely bewildered. And it seems I’m not the only one who’s confused.
Two headlines in the last week illustrate the current state of things.
“Pandemic Housing Boom Over as Rising Cost of Living Takes Hold’” proclaimed one publication a mantra which, I have to say, I was expecting. However only days later came the headline, “What’s behind the near £1 trillion Pandemic Property Price Boom and Prices are Still Surging?” Confused? You should be.
I’ve travelled to some far-flung places on this planet, including Fiji, Australia and New Zealand and I’ve lived and worked in Los Angeles, as well as travelling throughout Europe. From what I can tell, no nation is more obsessed with the value of their home than right here in the United Kingdom. Our homes really are our castles…
While other industries face tough times – retail is struggling, international travel is just about limping back to life as I write, overseas trade remains impeded – our addiction to buying, furnishing, improving and then selling our homes carries on at an overwhelming and pretty unpredictable pace
At this time of year, the housing market bounces post-Christmas, with the idea of “New Year, New Start”. As the daffodils open up, so do the viewings with a usually buoyant performance in the market driven by homes simply looking nicer in the spring and buyers feeling good as the sun gets stronger and the lighter days longer.
But this year, there’s a small, cold, pool of water lapping at our feet. Not yet enough to penetrate our trainers let alone dampen our socks, but it’s there. And there’s a wider ocean beyond that little lapping pool, with incoming waves of unknown scale or impact.
There are four reasons house prices have rocketed,
- The time we had to reflect in lock down presented huge numbers of us with the opportunity to look and search for a new place to call home.
- Government support including Stamp Duty holidays and reductions making buying more cost effective.
- Borrowing became so cheap, it was almost rude not to!
- The number of homes coming to market hit all time lows, so the demand for what is available accelerated and became more intense, driving up the values of what limited stock is on the market.
There are now also four reasons why I don’t think the rises will continue, and I also fear a fall may be forthcoming…
- The cost of energy increases has had no impact yet – but the truth is, we have no idea how much heating our existing homes next winter will cost, let alone presenting ourselves with the expense of a new home.
- Political uncertainty. Regardless of your voting colour, you don’t need to be Miss Marple to see that things in central government are unsettled. It’s fairly OK to say, when we don’t have faith that our leadership is secure, we tend to not make any bold moves until a feeling of security comes back.
- A potential overseas conflict – again, this is only opinion, but my own gut feeling is, if the country faces a conflict of any kind, my own sense is to “hunker down” and protect myself. Any kind of conflict drains financial resources of the country, but also drains confidence in making big decisions such as home moves.
- Lethargy – Have we all had enough of this yet? From forlorn first-time buyers through to doom-laden downsizers, I hear stories every day at the moment of willing buyers, unable to buy due to the odds being against them. The lower end of the ladder can’t find anything they like or can afford. The upper end, having agreed a deal, can’t find what they want to move onward to. Chains then break or fail.
I’m sorry I’m not bouncing off the walls with excitement this week. But buying a house usually involves a six figure spend, so it’s alright to tread water very, very cautiously over the next few months.
There are factors you can control, but like those waves I mentioned earlier, there are factors you can’t.
Homes developed by Richard Black can be found at www.richardblack.co.uk.
Richard Black is a Property Developer, Journalist and presents Home:Work the UK’s brightest Property Podcast available to download from your platform of choice or at www.thehomework.co.uk