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We have asked one of our Property Consultants, Reece Parkinson, to advise on a changing market due to the Covid-19 worldwide pandemic, and how locally it may impact the UK property market.
What New Challenges to Expect?
Reece Parkinson: I do believe the Covid-19 pandemic will bring some big challenges to the UK property market. The biggest challenge i would expect to be buyers using the situation to their advantage. This would be when making offers, but also potentially buyers who are currently in the process of purchasing wanting to re-negotiate or just withdraw and pause. In my opinion, this is inevitable to some degree but perfectly manageable with a good estate agent building good, trusting relationships with buyers and vendors, using their best knowledge to reassure clients.
Will agencies and the people within them need to adapt?
I think before anything can be said on this it is worth noting that the best salespeople should always be adapting in an ever-changing market in order to achieve the best results. Any market will not stay constant over-time, so i strongly believe an open mind-set & ability to adapt is essential for a successful business within the UK property market. With this in mind i would suggest that yes, salespeople will need to adapt to the Covid-19 market conditions. This will include being able to show empathy and patience with every client’s different circumstances and how they may have been impacted by the pandemic.
How has the pandemic affected the mortgage market?
It is common knowledge that the interest rates in the UK have been cut down significantly and is currently the lowest they have been since records began in 1975. An example would be if someone was to borrow £100,000 over the space of 25 years, they would be paying around £30 less per month in interest than before they were reduced due to the Covid-19 pandemic (this is, of course, going to vary based on the mortgage product). This, in theory, would suggest it would be a good time to buy if products allow, as payments back to the lender are lower, making a sounder investment.
What market have you been used to in your agency experience in the last year?
Firstly, my experience within the UK property market so far i would say has been overall a fairly good market. The only change I have noticed within this time was some buyers and vendors opinion on Brexit. From my experience, some of the clients we had looking to buy thought the Brexit uncertainties gave them more negotiation power to offer lower than they usually would. This was easily combatted with a firm stance from we as the agent/the vendor not giving in to the negotiations. Other buyers who perhaps were not in a position with a ‘need’ to move (such as first time buyers, in particular still living with parents just looking to get on the property ladder) decided they would wait to see the impacts of Brexit before buying so delayed the purchase. Vendors on the other hand seemed to be less impacted, however we had a small amount who decided to delay putting their property on the market to prevent ‘Brexit negotiations’. Again, the market remained fluid due to plenty of vendors still having that need to move (for example, those relocating). Overall, as previously mentioned, the impacts of Brexit in my experience were not as first feared- so hopefully this will be same after the depressing predictions of the Covid-19 impacted market place.
We cannot be certain on what the market will be like after lockdown has been lifted but we can make an educated guess. I personally think we will come back to a strong market after initial slump, maybe even the best i have experienced from my time in the industry. This is because 1- there will ALWAYS be people who have a ‘need’ to buy, managing these clients will lead to deals. 2- A large amount of people have held off from purchasing due to Brexit and other factors, now this pandemic has happened not too long after i think a large element of buyers will be fed up of waiting, and so therefore will take a ‘get on with it’ mindset. 3- The interest rates are very low and so will encourage anyone looking to buy that has a larger deposit will look to make the most of this and buy with potential favorable mortgage products. Along with these factors, some sellers may be willing to negotiate on their sale price due to the pandemic. This will attract plenty of keen buyers again leading to more deals & an overall positive market.
Sales have been agreed during lockdown and the us of our virtual viewings have proven very successful. It’s one of several tools we are using to adapt to the current market conditions.