Much has already been said regarding the COVID-19 pandemic and the economic havoc it is leaving in its path. At present, the pandemic is still a determining factor in many business and personal decisions today and is likely to remain so until a viable solution to combat it is set in place, hopefully during 2021.
As long as the virus is with us, it is paramount to identify the shifts it has caused in the customer experience and decision-making processes in the housing industry, to better understand what to expect in the market during these testing times.
Trust and reliability have always been a key factor in the housing market. Being able to trust a business is crucial to customers in any field, but this is magnified exponentially when it comes to major purchases like real estate. For most people, this is by far the biggest, most significant purchase they will ever engage in, and knowing you can trust the seller is not a bonus – it is a necessity.
Prior to the pandemic, people would initially gather information on relevant properties, usually online or through agencies, conduct a basic screening, and then visit the relevant properties physically. Viewing a property is a key stage in the buying process, since to almost all prospective buyers, online viewings do not provide the full essence of a property and its surroundings needed to make an informed decision.
But now during the pandemic, things have changed. Various restrictions make it much harder for some people to visit a potential dream home because of personal safety concerns, lockdowns, travel restrictions, etc. This further elevates the importance of trust and reliability, as people are much less forgiving at present if they visit properties that do not match the initial information they received.
Another key factor in real estate purchase is financing. The past year has seen a significant negative economic impact on both personal and business financial capabilities. However, several positive factors can help offset this situation and even create opportunities in today’s market:
Help to Buy – this government program helps first-time homebuyers purchase a property with just a 5% deposit. If the purchase price is less than £600,000, an eligible buyer can borrow up to 20% of the purchase price interest-free for the first five years. In London, a buyer can borrow up to 40% of the purchase price.
Low interest – The BoE base rate is at 0.1%, the lowest interest rate the UK has ever seen. Financing has never been so affordable, with buyers paying less interest on their mortgages and overall lower monthly payments.
No stamp duty – Until March 2021, buyers will pay no Stamp Duty tax on the purchase of their main property, provided it costs less than £500,000.
COVID-19 is bringing on many changes in behavior and preferences. The shift to online purchasing of everything from basic necessities to entertainment and luxury items, coupled with safety concerns and social distancing is also affecting the way people view their housing needs. It has altered buyer priorities when looking for places to live since previously important factors such as proximity to shopping, dining, and entertainment areas are becoming less of a necessity. Moreover, remote work is becoming increasingly popular, so the distance to work is also becoming a less relevant factor for a growing number of people. Also, the growing amount of time people spend at home due to the situation is starting to result in stronger demand for properties with yards, larger balconies, etc.
In today’s market, understanding the impact, trends, and even the opportunities the current situation has ushered in is crucial for property owners and professionals looking to weather the storm while capitalizing on opportunities it brings along with it.