Whilst activity may have slowed significantly at present, when it starts up again agencies that have … [+]
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A little over a month ago, when the coronavirus outbreak was in its infancy, most of us couldn’t have anticipated where we would be today. How quickly things can change…
Over a matter of weeks, as we all seclude and adhere to social distancing, I have the seen the U.K.’s mighty and mercurial housing market come to an almost complete standstill – a phenomenon in itself as unprecedented as the circumstances we now face.
Quite the turn of events from the start of the year when multiple people, myself included, predicted that 2020 would be a stellar 12 months not just for the housing market, but for many industries welcoming renewed public confidence and a willingness to spend.
It’s been a bit of a rollercoaster. But like a rollercoaster, there are lows and highs.
During the Great Depression, a number of businesses that made their name are now household icons in the modern day. They achieved this through a readiness to deliver solutions as and when people needed them.
But more importantly, they were ready to step up to the plate the moment the opportunity arose. Because the visionaries behind these companies knew that eventually the market would improve, and demand would overwhelm the floodgates bringing riches in its wake for the ready.
The property business is in similar straits. There is an ocean of pent-up demand in the U.K. that’s not going anywhere, and estate agents are using this time to prepare for the day when the lockdown is lifted and a reservoir of renewed public confidence bursts onto the market. It could be the making of many of them.
The market is certainly ready for it. In the opening months of 2020, the housing market was quickly gaining momentum as pent-up demand held back by Brexit and the third general election within five years unfolded to reflect a period of much anticipated growth.
At least, according to the latest Nationwide House Price Index, house prices were at some of their highest in March, averaging £219,583 after demonstrating six months of consecutive gains, with 3% annual growth overall. After several years of subdued demand, the market was primed for the good times ahead.
Then along came a virus that sat down inside us and frightened the market away…
A short, sharp shock?
The pace with which life has changed has been extraordinary, and it’s had a corresponding impact on the global economy as businesses and financial markets adapt their survival strategies to ride out the next few months.
It’s a scary time for many businesses, and particularly so for estate agents, who have seen much of their day-to-day capabilities diminish as the housing market is put on ice.
The good news for those fearing a deep and dark recession is that, although this is the fastest market plunge in history, it is not the deepest. That infamy lived and died with the market crash of 1929.
A key difference between the circumstances behind the Great Depression and what’s happening today is that the financial system melted down during the stock market crash. Our contemporary financial instruments have thus far held steady. Add this podcast from the folks at Marketplace to your work-from-home playlist for a better understanding of how the circumstances differ.
On that note, neither is what’s happening today comparable to the 2007-08 Great Recession. Both operate under very different scales of risk, with the financial meltdowns of both the Great Depression and the Great Recession considered as endogenous – as originating from inside the system – by the World Economic Forum.
In contrast, the COVID-19 pandemic is considered as exogenous – as originating from outside the system. These usual come as a surprise and there’s little we can do to precipitate such an event, which albeit cause huge damage.
Our financial systems are nevertheless usually well versed at absorbing exogenous shocks, as this chart from Rothschild & Co shows (see Growth: major economies), business optimism and economic projections have not descended as yet to the depths reached during the 2007-08 financial crisis.
A cause for optimism would be the coordinated humanitarian responses of many governments worldwide to lockdown their populations and introduce social distancing policies, all to ‘flatten the curve’ of the coronavirus pandemic. The good news for the U.K. is that our efforts appear to be working exceptionally well, as displayed in comparative data from the John Hopkins University.
In China, ground zero of the outbreak, a recovery appears to be in motion, with people returning to work and the wheels of their economic infrastructure starting to turn. It’s an encouraging sign for the U.K.’s road to recovery over the coming months.
Looking at the housing market in particular, the damage thus far has been painful and extensive, but a research outlook from Savills using recent data from Oxford Economics projects that while a short, sharp contraction will see UK GDP fall 2.5% in the second quarter of 2020, it will rebound 1.8% in the fourth quarter.
During this time, Oxford Economics predicts that the 0.1% interest base rate will remain until at the earliest fourth quarter of 2021, rising to 1.5% as we near the end of 2024. Conditions that will support growth during the recovery.
The outlook from the financial advisory Rothschild & Co is that this too shall pass, and that the rebound may be as sharp as the downturn if the drop is as such an overreaction to what’s occurred. The key takeaway is that whilst we face an immensely difficult period, the light at the end of the tunnel is brighter and closer than it appears.
Tomorrow belongs to the ready
With a view on that recovery, there is much that estate agents can do to survive this downturn and be ready to thrive when the recovery begins. And more so than at any point in history, we live in a solutions-driven society, where technology has the potential to lead the way.
Yes, the current options are limited during this lockdown. I reviewed just last week the few remaining avenues available for buying and selling during this crisis. Yet there have been some standout glimmers of accomplishment through this ordeal from agencies best able to adapt to the circumstances.
One prime example of this has been through virtual viewings and live walkthrough video tours. Showing that for adaptable agencies there is still business that can be achieved, and more importantly, a means for homeowners or those looking to get on the ladder to consider their options for when life resumes, hopefully within the next few months.
Most of us – barring the exceptional essential workers braving each day on the NHS frontlines and in warehouses, shops and delivery services to keep us all fed and well – are working from home.
For agencies this means shifting resources almost exclusively to digital channels. And in this there are many PropTech (Property Technology) solutions available that can assist both agencies and their clients through this period.
As virtual viewings and live video walkthroughs are still permissible, PropTech solutions such as Focal.Agent and Viewber are readily providing means and advice with which to showcase property for purchase or sale when the housing market reopens in the months ahead.
Furthermore, with a continued online presence and engagement key to developing and nurturing potential business, marketing intelligence and solutions to maintain communication and the flow of valuable information to buyers and sellers is absolutely vital. The services of platforms such as ActivePipe, BriefYourMarket, Dataloft, and TwentyCi could be a boon to future business, and they’re providing some really useful insights on how to engage with clients.
Whilst activity may have slowed significantly at present, when it starts up again agencies that have best positioned themselves front-of-mind of their potential clients will be first in line to assist with their home buying or selling.
Just as occurred during the Great Depression, when certain companies achieved astonishing success, businesses best prepared to deliver useful services during the inevitable bounce-back stand to gain significant growth and success.
In today’s epoch that spotlight shines brightly on companies such as Amazon, which has positioned itself sort of as a new ‘Red Cross’ – delivering essential goods to people stuck at home during this time of crisis. Where they stand to gain especially is in changing the consumer habits of people who never previously used Amazon.
Humans are creatures of habit and convenience; once they find a better solution, they stick to it. Agencies that are ready to educate, prepare and represent their clients for the inevitable rebound stand to gain the most from the hotpot of pent-up demand.
New beginnings are often disguised as painful endings
Looking at the suddenness and impact of the coronavirus on the housing market, I am reminded most aptly of Newton’s Third Law – for every action there is an equal and opposite reaction.
The Great Depression and the Great Recession lasted as long as they did because the long-term build-ups to their respective financial crashes compounded the damage and undermined the financial systems’ capability to quickly rebuild.
But this is a very different theatre, and it is my hope and belief that as sharp and painful as this period is, it heralds an equally rapid and restorative period of growth in the years ahead.