By Colin Wiles, housing consultant.

The economy is tanking, yet the housing market is booming, and I am part of it. Over the past few months I have been selling a house and a flat and buying a house, in Kent. My, what a stressful business it is! If you have bought or sold recently you have my sympathy. It is 32
years since I last did so, and I had forgotten how much worry is involved.

At one end you have the constant fear that your buyer will pull out. Do you have all the necessary building control certificates and guarantees for that loft extension, or the new windows you fitted 15 years ago, or the new roof you had to put on your kitchen? (My top tip – always keep a copy of every single piece of paper and file it away carefully.)

At the other end is the fear that your seller will decide to withdraw, or will sell to someone else. In between there is the stress of dealing with busy surveyors and solicitors, filling in a myriad of forms, punching the numbers, worrying about how you will move all your stuff.

Added to this is the febrile nature of the housing market during coronavirus. Is it foolish to buy now or is it better to wait? Where will we be a year from now? House prices have now hit an all-time high of £245,000 according to the Halifax, up 5% from last year.

These figures always need to be treated with caution because of the gap between asking and selling prices, but Zoopla also reports that the number of sales agreed in August was 76% higher than the five-year average, so demand is surging.

Mortgage lending has also recovered strongly, although some lenders, such as Nationwide, are refusing to lend on a large swathe of newbuild schemes (see the list of closed sites here).

Zoopla also reports that searches for suburban homes are three times higher than they were at this time last year. So, it seems that lockdown has led many people to reassess their lives and to think about how and where they want to live in future.

Perhaps the flight from the cities has begun. Some Londoners, in particular, appear to have decided that being cooped up in a flat during a pandemic is not very pleasant, when for the same price you could have a spacious house in the suburbs or countryside with a garden and space to self-isolate. Others are buying up second homes where they can escape to should another virus strike. My solicitor reports a
big increase in such sales along the Kent coast.

As for the way we work in future, HQN’s recent survey (briefing out soon) suggests that over 50% of housing staff are likely to work from home in the future. If this becomes the norm across much of the economy, there will be major implications for both the housing market
and the commercial property market. If people spend most of the week working at home and you only have to go into the office once a week or so, then you can live across a much wider geographical area. So much for location, location, location.

But it means that homes will also need to have more space to allow for separate home offices or workspaces for each adult. This could lead to a big boost in demand for larger properties in coastal towns and suburban and rural areas.

The government has already announced that many rural areas will also have to build more homes under the new planning algorithm, as I covered in my last blog, but it will also lead to millions of square feet of office space becoming available for other uses, as well as redundant hotels impacted by the loss of tourism.

The government’s relaxation of office to residential planning rules could present opportunities for housing providers, but many conversions churned out under permitted development rights have been truly awful, as I discovered when writing this report on “Rabbit Hutch Homes” for the Intergenerational Foundation.

If you are a housing provider involved in office to resi conversions you will need to tread carefully and ensure that you create high quality homes in the right neighbourhoods, close to schools, shops and other amenities.

My guess is that what we are seeing now is a short-term boom, driven by the stamp duty holiday primarily (it has saved me around £9,000). The depression that is coming down the line cannot fail to impact upon the housing market. Early in the new year I think the market
will start to stagnate and prices will fall – the Office for Budget Responsibility believes a 16% drop is possible.

There will likely be a stand-off as sellers and buyers fail to agree deals. The crash will also put many first-time buyers into negative equity. If you are thinking of buying for the first time, wait until March.

The slowdown will also likely lead to a number of sites being offered to housing providers at knockdown prices. With this week’s announcement of the affordable housing programme (more on this next week) desperate developers may be cosying up to the affordable housing sector to recover their investments. Again, tread with caution.

A year from now, we shall know what the longer-term impacts of coronavirus have been on the market. Past recessions have always led to a downturn in selling prices.

Meanwhile, speaking for myself, I completed on both properties last week and hope to be moving to a new place in the next few weeks. My personal housing market experience is almost over, I hope for many years to come.