House price data is becoming scarce – how can a buyer have any faith they’re not paying over the odds?
You’ve got just 15 minutes to decide whether to make the biggest financial decision of your life. Would you borrow thousands of pounds during one of the biggest economic crisis in centuries to buy a home that you have merely glanced at?
You can’t touch any surfaces, even with a gloved hand. Your children won’t be able to see their future bedroom or the garden where they’ll climb the trees. You can’t explore nooks and crannies of the attic or feel the depths of the cupboards. You have barely enough time to imagine your future in this home before your time is up.
When the property market staggers back to life after being put into deep freeze, this will be the new normal of socially distanced house viewings.
Under plans being drawn up, just two people will be allowed to go on 15-minute-long viewings, which will be limited per day. Sellers will be expected to open all doors and turn on light switches, and then wait in the garden or go out for their daily exercise while the buyer views the property without touching anything. Homes must be cleaned before and after every viewing. Buyers, agents and sellers will wear PPE.
Some estate agents suggest the months of lockdown have created pent-up demand and will lead to a rush of buyers. But who will really want to find and buy their dream home under these conditions? Whenever and however we emerge from lockdown, don’t count on the property market bouncing back into action.
After restrictions lift, the 373,000 transactions that were thrown up in the air may continue, but it seems doubtful that many more discretionary purchases will take place. It will be only those who need to buy and sell, forced to operate in a half-alive market.
Then there is the pressing concern of whether vendors will actually want to open up their home to viewings by strangers and any virus they may carry, despite the precautions taken. And what about the 2.5 million “extremely vulnerable” people who have been told to shield themselves? With even fewer homes put up for sale there will be little choice on the market, although this may perversely help to keep prices from falling.
The lack of properties sold will create another serious problem, making it almost impossible to measure house prices accurately; the Office for National Statistics has said it will not be publishing its index until there is enough activity again, and Rightmove has paused its version too.
This will hit buyers and sellers’ ability to gauge the market and know how much a property is worth or what to bid for it.
The house price data that does exist will be based on so few transactions – agreed sales have dropped by 90pc, according to the property portal Zoopla – that they may not be reliable. Hansen Lu, of Capital Economics, said that we may have to wait until July or August before these indices are back to normal.
He added: “If [house price index] providers publish inaccurate data, that could alter behaviour. At worst, a false reading showing a large house price fall could, by itself, trigger a more serious housing market slump.”
The property market’s emergence from lockdown will be broken: blind, straight-jacketed, and wearing plenty of PPE.