Will the covid vaccination be a shot in the arm for the housing market?
Since the start of the vaccination programme, we have seen regular bulletins telling us what percentage of the population are now vaccinated. If nothing else, this focus on measuring the spread of vaccinations (and the accompanying drop in infection levels) has given us all something to celebrate.
After a year of frantic activity and heading into what feels like a significant move out of the fear of lockdown, will the rising percentage of vaccinations have any impact on the housing market? Here is our in-depth analysis:
We will probably start to see vaccination-related effects around the third quarter of 2021. Even with the accelerated vaccination plan, it would still have been towards the end of summer before enough of the property buying demographic had received injections to influence the housing market.
Willingness to visit properties.
With more of the population vaccinated, we are likely to see an increased willingness amongst prospective buyers to physically visit properties (and amongst sellers to let people visit). It is a reasonable assumption that some more passive buyers will have been dissuaded from looking around new properties, even between lockdowns. This is particularly true of the more vulnerable buyers and sellers. With less chance of suffering from coronavirus after visiting a new environment, it seems to stand to reason that the passive buyer will be back on the housing trail.
Confidence that there will be no further lockdowns.
Another effect of the spread of the vaccine will hopefully be increased confidence that there will be no further lockdowns. Once the stamp duty holiday boom has passed, the threat of a further lockdown could easily translate to a ‘stay-put’ mentality. Moving to a new house is not something most people would risk under the threat of suddenly having to change plans. With the vaccine in play, the confidence that there will be no more (or at least, less strict) covid measure is bound to rise.
Other noteworthy factors
Now add two more factors to the mix: the 5% deposit mortgage scheme; and people getting back to work as restrictions are lifted; combined with the vaccine rollout, you have a market that will stay booming for a while. Especially at the lower end (and with first-time buyers), where the stamp duty holiday was less significant.
Additionally, with everything that has happened over the past year, people’s preferences have changed. Outdoor space has become essential, and the need to be near the workplace has reduced due to the rise of remote work. We, therefore, anticipate a higher-than-average number of people to move home over the next 3 to 5 years – the vaccinations and easing of the lockdown being the starting point.
Historically, the housing market can be subject to what we call ‘the moral effect.’
When consumers are confident and hopeful for the future the market responds and becomes more buoyant. Less concern over covid infections and the reduced fear of lockdown will almost certainly lead to a more positive mindset resulting in a more positive approach to the idea of moving or buying a new property.
The vaccine and the buy-to-let market.
Another angle to cover here is the rental property and the buy-to-let market. While the stamp duty holiday has kept the property sales market active during the pandemic, the rental property market has been slower than usual. Being furloughed is likely to have caused many tenants to postpone plans to move until they are back at work and things are more predictable. On the other hand, the general uncertainty and the eviction ban are likely to have caused many landlords to be cautious.
The vaccine should change this. We are likely to see a boom in the rental market, where we see a sudden demand from tenants, who are now eager to finally carry on with their plans. This demand is likely to be met by a supply of rental properties from landlords actively growing their portfolio, thanks to the fantastic buy-to-let mortgage deals at record low interest rates, that are currently available.
It is worth mentioning that the change of preferences discussed earlier (i.e., the need for outdoor space and remote work) applies equally to tenants as it does to buyers – a tip for landlords would be to consider investing in properties that cater to these changing needs.
All in all, as the threat of lockdown lessens and the stamp duty holiday ends, the spread of vaccination in the population could well be a significant influence on the housing market.
More importantly, the positivity produced by a less covid centric zeitgeist, coupled with the freedom of movement that a reduced fear of infection brings, can only be good for the market. In fact, it could well help to bring stability once the current incentives end. Stability reduces the potential for a price drop as we go into 2022, and that has got to be worth celebrating throughout the housing space.