"I believe we are going to see a real market boost in terms of the pent-up demand that will be unleashed."
Certainly, the latest raft of housing market data and statistics which focus on the first couple of months of 2020 have an other-worldliness feel to them. HMRC figures recently showed that residential transactions in February grew 6% year-on-year, and the 103,870 transactions which took place in that month were also up 4.5% compared to January.
We have also had a number of house price indices continuing to show a steady upward trajectory over the first two months of the year – the most recent, from the ONS for January showed a 1.1% annual increase, while Nationwide’s recent figures showed the strongest growth rate over the last 18 months.
The easy response to such data – especially now – would be to say it’s totally irrelevant, that the market has changed beyond all recognition, and the recent history of January and February 2020 should not even enter the equation when we consider what might happen next.
And, while of course there is a little truth to this, it’s also important to recognise the abnormality of our current situation. No-one in their right mind would suggest we are anywhere near a normal market – far from it. Instead, what we are currently living through is an effective ‘black swan’ moment for our economy, our social situation, and obviously the housing and mortgage markets, and the uncertainty is clearly around how long such an ‘animal’ might be swimming around in our pond.
What I think I can say with some certainty is that this will be temporary. How you might define what ‘temporary’ is, is clearly up to you. It’s obviously not ‘business as usual by Easter’ as the somewhat deluded President of the United States might believe it to be.
Of course it all depends on how we implement the measures introduced by the Government and the ability to wage war on this virus will largely determined by whether the overwhelming majority of this country are able to follow such guidelines. Doctors have warned of a ‘tsunami’ of cases resulting in hospitalisation and I think it’s certain that large numbers of people will die from the virus, regardless of what we do now.
However, what we can certainly do is work to ‘flatten the curve’ and our return to any sort of market normality will be based on the success of this. Whether it is three months, six months or longer, what we can hopefully say is that we will beat it. Other countries are showing the way, not least China itself, and eventually a vaccine will be produced.
And it’s at this point that the stats we’re seeing now from January and February for the UK do have a relevance, because they show the underlying fundamentals of our market. They show that, were it not for the virus, the ‘bounce’ is likely to have continued into Spring and beyond, and they also show a strength and – at some point in the future – I believe we are going to see a real market boost in terms of the pent-up demand that will be unleashed.
I freely admit that it can be difficult to look for positives in the current climate – clearly this is a tumultuous situation, especially in the purchase sector, but also in terms of ongoing access to mortgage products, the situation with valuations, how conveyancing firms might work through their process, and how this all works with a country currently in ‘lockdown’.
Difficulties do exist but my view is that business still can be completed or, at the very least, worked through to a point where it may have to be put on hold till the situation changes. Advisers are still advising clients, not just in mortgages but particularly in areas like protection, life insurance, and legal matters – plus they can still advise on remortgaging and product transfers, and deliver conveyancing advice. Our systems remain open and advisers are continuing to instruct our panel firms.
No-one would argue that the next few months will be difficult however this will not last forever, and while it might be easy to dismiss the first two months of the year, they may actually tell us a lot about what the future holds for us. The market will return and we will be ready for it.
