Buying a house in a post-COVID-19 world

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Buying a house in a post-COVID-19 world

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I wanted to write something a little different than normal, this isn’t anything to do with technology or my work. This is pondering the question, is buying a house in a post-COVID-19 world a good idea?

As strange as it is for someone nearing 40, I don’t own a house. I’ve moved around a lot in the last few years, probably more in this recent period than ever before, so it hasn’t really been on the top of my agenda.

Road Warrior History…

I moved back to Cambridge in early 2018 to be closer to my family, after a trip to NetApp INSIGHT Las Vegas 2017 changed my priorities in life. That was the year of the mass shooting at the Mandalay Bay and at some point, during my evacuation walk down the strip I decided I was going to pack everything up and just move home.

I had spent the 11 years or so prior living in Manchester and Bradford, with a short stint in London for a customer engagement. Although I had a house full of stuff and you could probably call it a home, I lived the consultant life most of that time, I was a typical road warrior. I saw more of hotels and motorway service stations than I did of my own place. Buying what would only be a glorified storage unit didn’t really seem all that important.

Since moving back down south a lot has changed for me, I settled down into a relationship and we wanted somewhere together. We currently rent a reasonably sized two-bedroom apartment close to the station in Cambridge. It suited us both as it was close to local amenities and was easy access for the trains, my family are just down the road so there is a support network for my partner if I’m away working.

Since then we’ve had our first child and it has made me think a lot about what we need for the future. I would love to be able to have pets for our son growing up (which we can’t have in this building) and I know that having a garden to play in is going to be a requirement in the not too distant future.

Searching for a unicorn?

I have some strict criteria for buying a house as I really don’t like moving and I want this to be something for the next 15+ years. Therefore I want something big enough to last us out that time, I’d like enough room for us both to work from home, room for another child should that happen and also room for my partners family to come stay with us when they want to as they aren’t local to the UK. I also need a garage, preferably double as my car isn’t child friendly most of the time.

All of that is a pretty big ask in Cambridge, one of the most expensive cities outside of London. Initial searching back in January/February had led us to places like Eddington, which is a new purpose built development on the outskirts of Cambridge. Ideal location and they had properties that ticked all our boxes, only problem, what we want would cost us about £1.3m. That’s a non-starter!

Fast forward a bit and my parents suggest we go take a look at Northstowe, it’s a new town being built about 11 miles north of Cambridge. Some googling leads to an impromptu visit on my lunch break one Monday, which leads to us putting in an offer a week later, on a plot due to be finished around August. Everything looked set, a 5-bedroom detached house with double garage and all for around £500,000.

Corona crashes the house party

A week later the coronavirus outbreak is starting to look a lot more serious around the world. There are talks of putting the country into lockdown, financial markets are starting to tumble and the Bank of England steps in to cut interest rates. My nerves at this point are on edge, are we about to buy a house that could be worth a lot less in a few months? We decided the risk was probably too great and pulled the offer.

We’ve been in lockdown for about six weeks now and I’m just not sure how long this is going to last. Our lease here is up in October and I don’t really want to renew for any longer, the place is nice enough, but it is starting to show its age (the building is about 14 years old). The property is just another investment for a wealthy ex-footballer, so it is geared towards maximising profits. I understand the business elements all too well, I just struggle to match the premium price tag with a less than premium experience. We’ve also had long-standing issues with heating that don’t look like they are going to be resolved anytime soon, especially with the outbreak and restrictions in place.

What do we do next?

The housing market is in a strange place right now, it’s effectively on hold. We have developers and estate agents telling us everything is going to be fine and not to expect any big price changes. Of course, they would say that, it’s in their interests to maintain prices. On the other hand, we have banks unwilling to take risks, changing maximum LTV on a lot of products to 60%. The banks are expecting something to give in the equation.

The future looks uncertain, unemployment is at higher levels than recent years, businesses and the economy in general are at risk the longer this pandemic plays out. Surely supply and demand in the housing market will change? Not according to many experts, which I find hard to understand. I read an article recently that suggested a short term dip in pricing this year, up to 5% if we lift restrictions soon, with an increase overall of 15% by 2024.

I just can’t balance the books on that thinking. Even without considering the short-term impact, coming out the other side of this the nation is going to have a lot of debt to repay. Bailing out businesses and supporting workers with replacement income is the right thing to do, but the money all needs to be recouped somehow. Future taxes my friends, that’s how! I can quite honestly see a return to post war levels of taxation.

Then there is the darker side of the equation. COVID-19 is responsible for over 20,000 deaths so far in the UK. No matter which way you look at it, that is going to put more houses on the market.

Final Thoughts

All of this is what I’m running through my head on a regular basis, how will all these things change the market and is buying a house now or in the next few months a smart move? Honestly, I don’t have an answer. But I need to find one quickly if I want to move my family out of this rental by October.

Are you in a similar position? Do you have any insights or advice to offer? If you do then reach out on Twitter or leave a comment and share your thoughts. All advice is good advice at this point.

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