Coronavirus: Is it time to make your move?

The UK property market has seen an uplift since reopening after lockdown – in part, no doubt, thanks to the government’s stamp duty cut, which may well prove to be a draw to anyone planning on moving over the next few months. If you’re considering purchasing a new property, how up to speed are you with the current residential property climate?

Economies across the globe have been affected by the coronavirus pandemic, one way or another. While e-commerce continues to explode, high-street shops have seen a huge downturn in trade as more people are choosing and/or being asked to stay home.

Furthermore, the government’s message is still largely to work from home where possible, meaning that you may find yourself juggling your living space to accommodate different, and possibly conflicting, needs. What was the kitchen table is now your desk, while your bookshelf backdrop gives your colleagues an intriguing insight into your persona.

It’s realistic to assume that, certainly for the time-being, having a ‘home office’ will be the ‘new normal’, particularly as COVID-19 cases continue to worryingly ramp up during the colder season. The availability of cloud-based platforms, video conference solutions plus having a robust broadband infrastructure have meant that those in office roles have largely adapted to remote working without too much difficulty.

Home comforts

This huge shift to home working could well turn our choice of home location on its head – after all, if working from home proves to be as efficient as being in the office, all the while reaping the benefits of being able to fit in the school run and pop the washing on, could the dream of a more rural, peaceful setup become reality?

Property website Rightmove reported a 125% upsurge in buyer enquiries in June and July this year, based on people contemplating a move to the country. Compared with a 68% rise in those looking for a town location, this speaks volumes.1

Melloney Underhill, Marketing Insights Manager at St. James’s Place, remarks that every household will have its own reasons for wanting a change.

“But whether you choose to move or not,” she says, “it’s important not to simply follow the herd. You should always take into account your own personal financial circumstances and goals.”

With no visible end to the pandemic on the horizon and the country now braced for a ‘second wave’, buying a new property that better meets the requirements and opportunities of the new normal might sound like an attractive option, she adds.

“But first you need to weigh up your own priorities and situation, in the context of the factors impacting the market. That’s where an adviser can help. As a minimum, they will provide a useful sounding board for you throughout the process.”

The here and now

Building society Nationwide states that property prices saw their highest price hike for 16 years between July and August 2020, rising by 2% to an average of £224,123.2 They put this down to ‘behavioural shifts’ – working from home being a major factor, not to mention other more specific reasons behind the property price boom.

Analysts have noted that there was a ‘release of pent-up demand’ once lockdown measures were eased in May, and subsequently a surge in house purchase enquiries. The stamp duty cut, running until 31st March 2021 in England and Northern Ireland where homebuyers don’t need to pay tax on the first £500,000 of their transaction, is a further motivator.

Another contributory factor might be that people have managed to pad out their savings during the pandemic. For instance, rather than splashing out on the usual summer holiday, some are instead choosing to add this cash to their savings pot, with a furtive eye on the future.

Whatever the drivers behind the recent flood of interest, it’s a trend that’s unlikely to be sustainable, even in the medium-term, says Underhill. “There’s a paradox here. We’re witnessing an increase in activity against the backdrop of a considerable recession.

“The next 12 months could see the market pull back, as that pent-up demand works through,” she suggests. “The outlook will also depend on whether the stamp duty holiday is extended, the state of unemployment, given the government’s support measures – and if employees continue to work from home.”

Penny-wise

Johnson, Client Banking and Mortgage Manager at St. James’s Place, emphasises that prospective homebuyers will still need to put down a considerable deposit in order to secure their property purchase. That aforementioned more robust savings pot could in this instance come into its own.

“Lenders are currently offering mortgages at a maximum of 85% loan-to-value (LTV). Some are coming onto the market offering 90%, but only for a few days – and there are big queues for these deals.”

According to Johnson, many lenders foresee a downturn in the second quarter of next year. “But if you’ve got your heart set on buying right away,” he adds, “you should try to save as big a deposit as possible – and plan your move carefully. Don’t make the jump unless you’re absolutely positive it’s the right time for you.”

He forewarns: “Certain industries have been hit hard by the pandemic, and some people – including the self-employed – may find it trickier to arrange a mortgage than others.”

Here, Johnson reminds us how crucial expert financial advice is in helping to handle the current COVID uncertainty: “We know the market, and which lender may accept you ¬– and we’ll keep on top of any delays or changes.”

He further adds that turnaround times differ greatly when it comes to lenders handling any applications. “These could range from five to as many as 43 days, in some cases.”

If you do manage to secure a mortgage, Johnson says, “it’s vital to ensure you have adequate protection in place. This will provide peace of mind that your repayments will be covered in the event the worst happens and you’re made redundant, fall ill, or pass away. Again, protection is something your St. James’s Place Partner is well-positioned to advise on,” he concludes.

So, on that note, is it time to make your move? How will you source the right mortgage for you? The value of financial advice in these unprecedented times is not to be underestimated. Our Wellesley financial advisers are ready to work with you to make sense of all the available options, so contact us today on 01444 244551.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Your home may be repossessed if you do not keep up repayments on your mortgage.

1 ‘Village enquiries double as city dwellers escape to the country’, Rightmove, August 2020
2 Nationwide House Price Index, August 2020