I’ve been trying to decide as to whether to publish this article. I absolutely love the industry I work in and am passionate about helping people onto their next course in life. That being said, I’m conscious that in this current climate, dare I say it, there are other important things to consider, mainly the preservation of life and spending time self-isolating with our families.
It’s safe to say that it’s been a particularly challenging time in the York property market let alone other industries and disciplines. In my 12 years in property I can’t remember a time where we as agents have had to be more malleable. When I first started in property, the roles I carried out were predominantly accounts-based. As such, I didn’t feel the impact as much as those front-of-house agents who were paid to let or sell houses.
Following government announcements over the last few weeks, we’ve had to close our offices to the general public, work from home and find ways of letting and selling houses whilst maintaining our corporate social responsibility and importantly, doing what we can to mitigate the spread of the dreaded C-word which has swept the nation at an unprecedented rate.
Ultimately, as Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”
In my posts I generally include some stat-heavy data and graphical content but in this instance, I want to share my thoughts on what is happening and what I expect will happen over the course of the year. It may come as no surprise that the York property market has slowed down and arguably ground to somewhat of a halt. I keep hearing of this being the next property crash and that the property market will follow in the same way as the stock market.
However, I am firmly of the mindset that this is not the case and that the York property market will continue to thrive once we are through the worst of this pandemic and things begin to normalise once again. Looking back on the 08/09 crash, there were three driving forces for the York property boom and subsequent bust, supply and demand, sentiment in the market and availability of finance.
Prior to the crash consumers were investing heavily and property was all the rage. Lending was less regulated as it is today, and some individuals were able to finance purchases for near enough 100% loan-to-value. As this market became unstable and effectively untenable, as lending ceased, individuals were thrust into a position of being unable to purchase property meaning less ability to buy property very much creating a buyers’ market. Prices in York dropped on average by circa 20% (according to the Land Registry House Price Index) before starting to recover. Also, it is worth noting, around the last crash, the Bank of England Base Rate was 2%, not the dizzying heights of the 80’s when at the time the government set the base rate, but still higher than it is today.
Availability of finance is the key here and since the last crash, the mortgage lending sector has become significantly more regulated with average lending being around 75% of a property’s value.
Roll the clock forward 12 years and as a nation we are amidst one of the most harrowing times we could ever think and naturally there is a great deal of uncertainty in the property market. You may even read articles in the news about mortgage lending drying up but having spoken with a number of mortgage brokers in the greater York area, lenders are still lending under the same terms.
Furthermore, the Bank of England base rate has dropped from 0.75% at the beginning of the year to 0.25% and now a further reduction to 0.1%, the lowest it has ever been since records began. This would be in an effort to stimulate the economy and disincentivise consumers to save money but rather spend. This also means mortgages are cheaper than they’ve ever been so now is a great time to review your mortgage and secure a preferential rate in these uncertain times.
Well what is in stock for the York rental market? Well a vast proportion of tenants may now be in a position where they are unable to work, earn a living and consequently pay their rent. This invariably has a knock-on-effect for landlords, some of whom rely on the rent to pay the mortgage and subsidise their living costs. With that, it amazes me how apt the term ’cause and effect’ is here. With the government intervention to limit the effects of the COVID-19 outbreak, now is the time as a landlord to take action, contact your mortgage lender (if applicable) to discuss options of potentially a mortgage-freeze especially if from speaking with your tenant, you have any concerns that they won’t be in a position to pay the rent for the foreseeable future.
On that note, I would recommend keeping the lines of communication open with your tenants at this time and should they be in a position where they are going to struggle to make ends meet, attempt to reach a mutual arrangement where they can settle any arrears over time.
At the end of the day, people still need to buy, sell and rent in York and in light of the above, I expect that we are due some challenging times ahead, but once the dust settles, the market will return more buoyantly than ever. Let’s not look at this as a crash but more of a wobble and an opportunity to take stock of what we aim to achieve.
I mentioned earlier about adapting to change and for that reason and we have had to find ways of tailoring our service to accommodate the current climate by way of virtual tours, virtual valuations, digital means of document management and legal compliance. The market may be moving slower, but rest assured it’s still moving.
If you have a property to rent or sell or are a tenant and have concerns about how you may be affected, please give me a call.
For the time being dear reader, I wish you and your loved ones safe and good health.