‘New normal’ challenges facing housing market - David Alexander comment
Unlike earlier generations, the “baby boomers” and their successors have managed to get through life thus far without suffering the depredations of a major war.
Most of us have never had to wave loved ones off to fight or, worse still, never been on the receiving end of aerial bombing. But if we thought we’d escaped without a communal scratch, coronavirus has disabused us, because in some ways, the pandemic is turning into our “world war”.
Lockdown has been our “blackout”. We’ve seen shortages of certain foods and materials; bans on travelling beyond three miles of the home and public transport curtailed. Now pubs are subject to a curfew and people are snitching on neighbours. Just like World Wars One and Two, the coronavirus crisis – when it does eventually end – will have changed society. But by what measure?
World War One was followed by a consumer boom as people sought to stock up on goods denied them during the conflict. But this continued for only 18 months and mass unemployment lasted for the next two decades. The end of the second war was totally different; no consumer boom but no high levels of unemployment either.
Despite being in hock to American loans, the Labour government embarked on a programme of public spending, and when the Tories returned to power they too spent massively, especially on building council housing. Eventually factories manufacturing consumer goods started to boom, but this time it wasn’t temporary.
These historical trends may have a resonance with the post-Covid era, particularly in relation to housing. The moratorium on Land and Buildings Transaction Tax (LBTT) and Stamp Duty (effective to at least the end of March) has led to a boom in house sales but will it be temporary (shades of post-WWI) or will the outcome be more benign as was the case after WWII?
I’m confident the decision has been based on keeping the property market alive – and the hundreds of thousands of jobs directly or indirectly dependent on it – and is not merely a sop by government to worried voters. Hopefully it is part of a “ship-steadying” policy that will see the sector through. Clearly the current level of transactions is not sustainable while coronavirus continues to have such a negative effect on the economy, but hopefully the foundations have been laid for a reasonably steady recovery once an effective vaccine has been developed.
But just as with everything else, the market will be subject to long-term changes. Properties with their own private open space will become even more sought-after. Some people will be prepared to pay for an additional bedroom for home-office purposes. And less commuting means fewer of us will need to live within or close to cities, potentially leading to a rise in demand in smaller market towns.
While on the subject of work, people may need to become more flexible in terms of location. Hence there is likely to be some shift from owner-occupation towards renting, especially should England follow Scotland in making tenant-friendly short minimum leases compulsory. The rented sector may also come under renewed demand from students, given the current coronavirus outbreak associated with specialist student accommodation in several Scottish cities.
At present a group of students renting a conventional flat will not normally be subject to the quarantine rules affecting those living in designated student blocks, so long as no one in the household has tested positive, of course. This may lead to students deciding they’d prefer to live separately from large numbers of their peers.
Another change is likely to affect Airbnb-type operators, for reasons separate from any restrictions they may face as a result of local authority legislation. Tourists seeking serviced flats may now prefer to deal with bona fide agencies that specialise in structured holiday accommodation rather than rely on more casual lettings – even if the latter are less expensive.
David Alexander is MD of DJ Alexander
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