The housing market officially reopened mid-May for socially-distanced viewings after two months of uncertainty due to the global coronavirus pandemic. But what does that mean for those looking to buy? Will the price of houses be affected? And will you be able to get a mortgage? HELLO! turned to Location, Location, Location star Phil Spencer to pick his brains on the tricky subject. After 20 years on our screens alongside trusty sidekick Kirstie Allsopp, who better than the beloved property guru to answer all your burning questions!
The housing market reopened mid-May despite the UK lockdown
First things first, for anyone having doubts about moving despite the government’s go-ahead, Phil insists it’s perfectly safe. “The protocols have been put in place to keep people safe – for the estate agents, the buyers and the sellers, the valuers. If everyone follows the protocols it is safe!”, he says.
Read on to find out whether to wait it out or – in Phil’s own words – to ‘crack on’ with your move…
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Phil Spencer on… whether to exchange during lockdown
“It rather depends on how much you love the property that you’ve found and how much of a hurry you are in. If you’ve found something pre-lockdown and you absolutely love it and it’s going to be your home for a long time and you’re getting married in September or are having a baby and therefore you’ve got a time limit, then – crack on!
“Personally, if you weren’t in a massive hurry and you hadn’t found somewhere you were completely in love with, then I’d sit on the fence for a little while and see how things settle down. Time will tell. There is uncertainty out there in the world – and if you can avoid making a big financial decision, I would.”
Phil Spencer on… whether coronavirus will affect the housing stock
“There are three events that drive supply to the housing market – death, divorce and debt! And there’s going to be lots of those three in the months ahead. It’s difficult to work out how people will have reacted locked up in their homes. Either they’ll go, ‘I am so sick of these four walls, I’m out of here as soon as I can. I’m off to live in the countryside, or buy a place with a garden’, a knee-jerk reaction to lockdown. Or they’ve been in their homes and thought, ‘This doesn’t work, we’re going to have to build an extension’. It could go either way.”
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Phil and Kirstie Allsopp are celebrating 20 years of Location, Location, Location
Phil Spencer on… whether house prices will go down
“The answer depends on how long the restrictions remain and how deep the damage to the economy turns out to be. But what we can’t factor in with the housing market is that so much of it is driven by sentiment and how people feel. So if they feel uncomfortable or nervous about the economy, or their job – it will translate into not much happening in the housing market. People won’t feel like borrowing extra money.
“But house prices are not going up – that much is absolutely certain! It depends on consumer confidence and how long it takes to come back. My personal prediction (and I’m not an economist), would be about minus five per cent straight away, and minus about 12 per cent in a year’s time. I think it’ll get worse.”
Phil Spencer on… trying to get a mortgage during lockdown
“Wait a while. I’ve read a lot about there being a 40 percent deposit required for mortgages. But I’ve spoken to a lot of brokers and when you drill down into it, the reason they were doing that was not having enough people to man the phones to process things. As things get back up to speed, people come back from furlough… I think if someone is thinking they can’t borrow money now, the reasons behind that will ease.
“Unless of course they’ve had a personal change of financial circumstance over the last few months, which many will have. On that note, I think the banks will be more carefully looking at people’s industries and the security of their employment and the business they work for. People do need to think forward about what position they’re going to be in in a year’s time. If you’re struggling, just wait – it will come back.”
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Phil shared his prediction for how much the price of houses will drop
Phil Spencer on… renegotiating the price with the vendors due to coronavirus
“That is taking advantage of the circumstances. In actual fact, the prices have not fallen yet, so in trying to renegotiate the price you agreed before lockdown, you are asking them to anticipate a fall that hasn’t happened yet. That’s quite a lot to take on board as a seller… I think it’s pretty rude to instigate that conversation yourself.
“If I were in that situation, I would probably say to the vendor, ‘We agreed on a price when the world was in a different place. I’d still love to buy your house, but my finances have changed, my mortgage has changed. And I can’t proceed at that price, I’m really sorry, I’m going to have to let it go.’ You’re not renegotiating, you’re putting the emphasis back on them – and if they really want to sell you the house (for example because you’re a first-time buyer, you’re not in a chain, you’re ready to go) – then they can come back to you with a suggestion.”
Any final words of wisdom?
“If you’re going to move, then crack on – or sit it out!”
Phil has been answering prospective buyers and renters’ biggest questions on his website Move iQ, where you can find more detailed information and advice.