The COVID-19 Crisis & How It Is Impacting The Property Market

COVID 19 impacting property market

In the words of my mortgage advisor when we were ready to sell up and buy a house this year she said, ‘strap yourself in and prepare for a rollercoaster ride. Because ANYTHING can happen’.

Buying property no matter the month, year or property is stressful and hard. Much to contrary belief, there isn’t anything exciting about buying a house until the day you’re in it, sat on the floor eating pizza surrounded by boxes. But the COVID-19 crisis has had the property market to a standstill. It’s then been supercharged by many different facets with people in the industry saying it’s like nothing they have ever seen before. Speaking from our own experience, it has been nothing short but crazy. We are 6 months into this process with one complete chain collapse, delays, unresponsive sellers, twice as much paperwork and a feeling like you’re getting close, but you’re still so far away. The market is so volatile and it is impacting pretty much everything in the chain.

If you’re considering to sell up, or are looking to purchase your first property, here are some things that you’re going to need to be mindful of during this current climate.

If you’re selling – you need an offer on your property before you can view

Wait? So how does that work? You have to find a buyer first and then wait however long and keep your buyer waiting whilst you find a suitable house? Things are changing slightly, but not really with this rule. Back in June, you could ONLY book a viewing if your property was already subject to contract.

This suddenly puts an incredible amount of pressure on finding the ‘right’ property. The problem with this is it leads to the potential of settling for a sub par house in the hope that you don’t lose your buyer. And, so it begins.

Whilst I ‘get it’, it was also done to reduce the amount of viewings during COVID that are not necessary. There are so many time wasters out there that literally just want a jolly and have a nosey at a house they have no intention of purchasing. It’s good if you’re selling up, but not so good if you’re buying too. I would just recommend browsing the listings that come onto the market on a daily basis, save your favourites and when you have that offer in place, book as many viewings as possible.

Mortgage Lenders Scrapped Low Deposits

When I rang my mortgage advisor back in June she said ‘I have never seen anything like it’. Due to COVID-19, mortgage lenders had few deals, and had completely scrapped 95% and 90% loan to value deals which pushed out a lot of first time buyers from the race.

According to Which?, “Banks and building societies have dramatically cut their ranges of 90% and 95% loan-to-value mortgages since the start of the coronavirus outbreak, with only a handful of deals now remaining for buyers who have the smallest deposits”.

The good news is that these lower deposits are coming back in now as a way to get the property market moving again. Not that it actually needs any help now! During COVID-19 your personal circumstances, salaries and position might have changed. With 5% deposits available from various lenders, your first home, and getting onto the property ladder might suddenly seem possible. Due to these industry changes and the aftermath of COVID-19, now is the perfect time to calculate mortgage affordability to see what sort of budget you have to work with. You can’t do any of the next steps buying a home without doing this first. You’ll need to fill in your gross income (before tax), overtime, any additional income, outstanding debts and the deposit you’re looking to put down.

You can then have a play around with house prices, deposits, and the term of the mortgage you’re looking to take out and it will calculate your projected monthly payments. Super clever, and it’s really useful to see how minor changes to deposits and terms can impact those payments.

It’s A Sellers Market

When the market is hot, it’s a sellers market, and the tables have not turned yet. It’s a sellers marlet when there are more people looking for houses than there are available. COVID-19 gave people time to reassess the space with changing preferences of buyers, who are now looking for more indoor and outside space. The market was also buoyed with the stamp duty holiday which ended at the the end of September.

However, even with stamp duty being reinstated, the boom is not over. There is still a growing imbalance of houses to people looking. Many people have actually waited until after the stamp duty holiday in the hope that things have calmed down on the property market, but they absolutely have not.

It really is a fantastic time to sell, house prices have inflated whilst it has led to many buyers fighting over one home, thus pushing those purchase prices up even higher. According to the BBC, “a typical UK home costs more than £250,000 for the first time after prices rose by 9.9% in the last year”.

For us to find the perfect home and then jump back into the rat race, only to find that houses were literally gone as soon as they touched the market, it was incredibly difficult. If you are wanting to move now I cannot stress enough that you have to be ON IT. You don’t have the chance to think, you can only react.

We were looking hourly on the listing sites and ringing to make a viewing as soon as they opened up. It doesn’t give you much breathing space, but making a decision on that day whether to put an offer in or not makes the difference between getting the property or not. Just be mindful of what you can afford and don’t offer more than the property is seemingly worth as it will cause issues when it comes down to your mortgage lender valuing the property.

Sales Are Taking Much Longer

With the amount of purchases going on through the system, delays from COVID and the pressure of getting sales through due to the stamp duty holiday, there have been excessive delays. Where a house sale might normally take on average 8 weeks, it has been taking 3 months + for sales to go through.

Where there was that standstill at the start of the pandemic, this caused an unruly backlog which is only just starting to resume normal service. It caused huge paperwork delays for mortgage applications, solicitor paperwork and local searches. Some searches have been taking 3 months to come back, slowing down the entire process. Add a few more houses to a chain and we’re talking mission impossible. Even with purchases that have no onward chain, it has been delaying things much more than they should be.

Where Do I Think The Property Market Is Headed For 2022?

It’s honestly true that whatever comes up goes down. We are absolutely not at the end of this boom, once we are past Christmas (a naturally quiet time) there is always an influx of new people looking to sell up and move on. But there is a lot of speculation that borrowing money will be much more expensive.  According to the Express, “inflation is expected to rise above four percent by the end of the year which will make home loans more expensive, but could slow demand for properties, making house prices decrease in the process”.

It’s been a super hot time to sell, and buy with stamp duty holidays, rising house prices and super low deposits, but it’s inevitable that things will change as quickly as the property market soared.

The housing market is a volatile one right now, but as long as the demand for moving home remains then who knows what could be in-store for everyone looking to buy and sell in 2022. Just remember, strap yourself in for a crazy ride!