The post-lockdown Aberdeen residential property market
“We’re all in the same boat.”
When it comes to coping with COVID-19, this trope’s been used too often.It’s far more accurate to say we’re all facing the same pandemic or, figuratively, weathering the same storm.
One area that illustrates this perfectly is residential property.
During lockdown — and I’m generalising here — those fortunate to have a garden have had the chance to make the most of extra space during lockdown.
These spaces have been somewhere to relax, play, and exercise.
And with shortages of fence paint, if you believe what you see on social media at any rate, they’ve served as a welcome DIY distraction from what’s been going on.
And now in phase two, they’re somewhere to safely meet friends and family.
On the other hand, for many without balconies or outdoor space, or those who don’t have green space nearby, lockdown’s naturally been more of a struggle.
What does this all mean for the housing market in the north east?
Time will tell, but I’d be surprised if it didn’t affect what people look for in a new home.
I’d expect those looking, if they were able within their budget, to be adding a garden, or nearby parks and other outdoor recreation spaces to their must-have list.
A large number of our May and June sales so far have been family homes or converted steadings with plenty of space, but it’ll take more time to genuinely call it a trend.Interestingly, a recent RICS survey supports this view.
Eighty-one percent of respondents from across the UK said they expect an increase in people looking for properties with gardens or balconies. Seventy-four percent predicted a growth in demand for properties near green spaces, and 68% felt those with more private and less communal space will be more popular.
Property types aside, the good news is we’re seeing signs of growing activity in the market.
Inquiries are increasing, and we have almost 100 homes ready to go to market over the next few weeks.
In more good news, as of a few days ago, all home moves are allowed, as long as they can be done safely.
People can also visit a property for a viewing and valuations can start. Despite this guidance, we’re expecting a significant shift in the way people view properties.
More people will be reticent about meeting others, and that’s not likely to disappear soon.
This has led to estate agencies, including us, offering a wider range of virtual options. Potential buyers can now choose from the likes of real-time tours using software like WhatsApp and FaceTime; video walkthroughs, which have been increasing in popularity for some time; and virtual, or 360 degree, tours.
These allow viewers to walk through a detailed simulation and get a feel for each property.
And these options are finding favour, particularly as people find they’re saving them time and effort, and they can easily keep their distance from others.
They’re a great way to whittle down a long list of properties too before you even step over a physical threshold.
While not quite on the same level as the recently reported £6million penthouse sale in London, which was conducted entirely online, a couple of weeks ago one of our viewing executives carried out virtual tours of a property for five different people.
This property went to a closing date at the end of the week — watch this space for updates — though we’d expect most offers would be subject to a physical viewing.
This caveat will likely become common practice although we’ve also received offers, based entirely on WhatsApp tours, that aren’t conditional on a physical viewing.
The mortgage picture
So we now have new ways to help you find your next home, but when you’ve done that, how easy is it to get a mortgage?
For a start, it looks like you’ll want a bigger deposit set aside than you’d have needed for the same home just a few months ago, but help’s at hand especially for first-time buyers.
My colleague Chris Hay, mortgage advisor at Golden Square Wealth Management, says at the beginning of the lockdown, the majority of lenders had capped residential mortgages at around a 60% loan to value (so buyers needed at least a 40% deposit).For the last few weeks he says it’s settled at around 80 to 85%.
You can get a 90% mortgage, and it may be more appear over the coming weeks, but at the moment they are limited, and the criteria for underwriting and credit scoring have really tightened up.
On a positive note, the First Home Fund (FHF), a Scottish Government shared equity pilot scheme gives first-time buyers up to £25,000 to help them buy a property if they have a minimum deposit of around 5%, subject to individual lender requirements. At least 25% of the property cost must be covered by a mortgage.
This initiative is helping people get competitive, mainstream mortgages.
And the turnaround times are quick and there are lots of great starter properties around.
The bottom line is we’re preparing for things to pick up and the market’s on the move again.
However, quite what demand will look like over the coming months remains unclear. What confidence in the Scottish economy looks like, as well as a clearer picture of employment when the job retention scheme finishes, will set the tone for the short to medium-term.
Regardless, we’d expect these virtual tools that have proved their worth throughout the pandemic, to be an integral part of the buying and selling process from now on.