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7.3% of Nottingham Workers Worked from Home Before Covid-19 – Wonder How Many More do Now?

 

Before the Covid-19 pandemic hit, 8,566 Nottingham people worked mainly from home, or about 7.3% of Nottingham’s 117,164 workforce (compared to the national average of 14.9%). Yet over the last few weeks many thousands more Nottingham workers have joined them in their spare rooms or at their kitchen or dining room tables.

 

Amongst warnings from the Government that some lockdown constraints could stay in place into 2021, businesses are dealing with an unexpected cultural shift in how many of us do our work. Talking to many Nottingham people who have been asked to work from home, for many it has been a pleasant success.

 

Working from home does have some negatives though. I have found myself still working at 8pm/9pm and beyond as I have forgotten to clock out and whilst many people might think working from home means doing less work, more often than not, the reverse is true for industrious and hardworking employees. When you don’t have that break of the commute to the office, the workday can blend into ones home life. Talking of commuting, the average British worker has a daily commute of 11.9 miles, whilst locally…

 

The average daily commute for a Nottingham worker is 8.4 miles

 

At least working from home, the commute is only to the dining room table or spare bedroom. Speaking to some friends of mine that are new to working from home, they said to me that they can feel out of the office-loop as they miss the ‘water-cooler’ moments or spur-of-the-moment brainstorming session over a brew, it’s tough to reproduce that from home.

 

Don’t forget to get into your garden (if you have one), stretch those legs. Ensure you are taking advantage of the daily exercise allowance. I see so many people walking around our neighbourhood daily who I haven’t seen before. Let’s hope they keep up the habit once lockdown is removed. You have to admit, it’s quite nice especially as there are far less cars on the road.

 

Nottingham workers commute 842,885 miles a day to work. That’s nearly twice to the moon and back – every day!

 

Some people find it difficult to adjust to working from home and feel guilty if they don’t reply to co-workers emails or phone calls straight away. My friends stated that they didn’t want their team-mates to wonder if they were taking it easy rather than pulling their weight. The best advice I can give from working with my team, is to over communicate, and I suggested (as I do to you) to tell their bosses and colleagues what they are doing and share their accomplishments using those video conferencing software packages.

 

The really hard part is having a dedicated space in your home.  Attempt to set up a workspace and make it out of bounds to the rest of your household while you are working (although that is very difficult when you have children or your partner is having to work from home as well). Is there anything worse than being on an important call to your boss or a client, only to have a delivery driver knocking on the door or having your kids and dogs yelling and barking in the background? It’s a balancing act!

 

Interestingly, looking at the stats and this internment in Nottingham people’s homes could be a catalyst for people wanting to move home later in the year be it for rent or for sale, thus giving a vital boost to the Nottingham property market. Would it surprise you that…

 

43,155 Nottingham households are either at full capacity or officially overcrowded?

 

The definition of full capacity is when the household has enough bedrooms for the occupants. The definition is set out in ‘The Allocations Code of Guidance’, which recommends that the 'bedroom standard' is adopted as a minimum measure of overcrowding.

 

This means one bedroom should be provided for

 

  • each adult couple.
  • any other adult aged 21 or over.
  • two adolescents of the same sex aged 10 to 20.
  • two children regardless of sex under the age of 10

 

That means 36.32% of Nottingham households do not have a spare bedroom for their occupants to work from

(compared to the national average of 16.64% of household)

 

Even worse, I suspect there are many Nottingham families with two teenage boys or two teenage girls, and guidance is suggesting they can share a bedroom – do they live in the real world? This means there are probably even more Nottingham households that are at full capacity or even more overcrowded than the stats suggest, meaning plenty of people will be working from dining room tables (if they have a dining room that is) and quite probably the kitchen table … a recipe for even more people wanting to move home later in the year.

 

So, I don’t know how many Nottingham people are working from home, yet looking at the newspapers the consensus is that it has at least doubled. For all the reasons mentioned in this article, this looks like we could have a pressure cooker scenario of demand for Nottingham property once the restrictions have been fully lifted.

 

Meanwhile, a message to all you new homeworkers in Nottingham. Working from home is a tough one. The best advice I can give is to change your way of thinking.  I know many friends who are missing their offices right now, yet is office-working really so great? Consider the relentless risk of disturbance when you are trying to finish that important project, the recirculated air conditioning with its germs, the shortage of quiet meeting rooms and as I have already mentioned before, the drawn-out and expensive commute.

 

Try breaking the cycle of thinking that being at work - time is productive and not being at work - time is only leisure. The new way of thinking that accepts the concessions of home-working and discards the traditional 20th Century conventions of office working. Yes, the downside is that as humans we are very sociable creatures and we acutely feel the need to be in face to face contact with each other often, meaning lockdown is quite tough for many of us. Yet, if we are able to connect the positive prospects for the future working and the situation that Covid-19 offers us, then together as a society we should be able to find the right balance between working from home and coming together. In the meantime, be considerate of each other and keep safe we are all in this together and we will all overcome this together.

 

Kind Regards

Angela Barbaro-Robins

What Will Be the Effect of Covid-19 on the Nottingham Property Market?

 

So now we are only a matter of nearly 6 weeks into lockdown, yet can you believe it I am still speaking with agents from all over the UK, and I do not jest, properties are still being sold and let even in these unprecedented times. Yet I would like to address the question I have been asked many times recently “What will be the effect of Covid-19 on the Nottingham property market in the short, medium and long term?”

 

These are obviously unchartered times, yet we can look back in history to give us clues and more recently, the bounce back that is happening in China (and their property market). The Covid-19 situation will touch all parts of the Nottingham and UK property market, and so in this article, I will be considering its impact on Nottingham property prices, transaction numbers (i.e. the number of people that move home), Nottingham buy to let landlords and finally tenants and the rents they pay.

 

The Three Issues with the Virus and the Property Market

The first issue has to be the lockdown itself. Limitations on society’s capability to go about their normal working life will hinder the house buying/selling process. The practical difficulties of moving home and expediting the property sale; from the viewing itself, the Energy Performance Certificate being carried out, the surveyor checking the property for the lender etc., are all issues. Yet the estate agency and legal industries are coming up with some innovative solutions, from virtual viewings to legally watertight delayed completions, where the old owners stay in the house under licence during the lockdown, and the move will take place after the lockdown period.

 

Secondly, the UK housing market has never liked ambiguity or uncertainty and this virus will play a part on people’s feelings and sentiment towards moving home (or not).

 

Thirdly and finally, there is the issue with the money people have, be that wages, whether they have a job (or not) and their overall affluence, on the back of the 29.4% stock market decrease in the last two months (correct at the time of writing this article).

                   

The Background Economics

The economy drives everything including the housing market – and the overall measure of the economy is the Gross Domestic Product figure or the GDP (the GDP is basically the total value of all the goods and services created by the whole UK economy in one year and it currently stands at £2.15 trillion).

 

Looking at what has happened in China, most economists believe the UK will experience a short, yet sharp economic shrinkage in Q2 2020 with GDP set drop by 4% to 7% in the one quarter depending on the extent of the lockdown. Then GDP is expected to level out in Q3 2020, and then a significant ricochet (how significant depends who you listen to) in Q4 2020/Q1 2021.

 

Now putting politics aside, I have been impressed with Boris Johnson’s response with wide-ranging support for the UK economy and businesses, and whilst it’s far from perfect, help has been in the guise of the Bank of England reactivating its Contingent Term Repo Facility increasing liquidity and keeping the money markets going (important as that was what the issue was with the Credit Crunch), business grants and Government backed loans, together with telling lenders to take a compassionate line to those unable to make mortgage holidays and finally the furloughing of staff, thus allowing a quicker recovery in the economy.

 

What Will Happen to Nottingham Property Values?

There are a few doom-monger economists predicting Armageddon, yet I feel a lot of that is to get column inches in the newspapers. The Nottingham property market is less exposed than it was in the previous four historical property crashes in 1972, 1979, 1988 and 2008. This is because of the following reasons..

 

  1. Before each of the four crashes, there had been a significant upward spike in property values prior to the crash. We have not experienced that over the last 12 months.

 

  1. Mortgage interest as a percentage of household income (nationally) was a massive 32% in 1988, 18% in 2008 – yet now it stands at just under 8% (because interest rates are so low).

 

This is all assuming we don’t have high unemployment. Yet historically, it has been proved house price falls are not caused by high unemployment. It is in fact, that it happens the other way round, that a housing downturn can (not always) create unemployment - yet with the Government furloughing people – this shouldn’t be such so much of an issue.

 

The value of an average Nottingham home currently stands at £217,000

As I will explain in the next section, the biggest effect will be on transaction numbers, not on property values. I suspect in the summer there will be some Nottingham homeowners who will want to sell at all costs, and not care what price they achieve. Savvy property buyers will swoop on those properties and drive a hard bargain, meaning there will be some short-term localised reductions in what properties sell in the summer for those that want to sell at any cost.

 

Yet, these reductions will artificially amplify the property value indexes in a downward direction in the autumn (the ones the newspapers mention when they talk about property value changes) because they will be based on the very low levels of property transactions that will take place in the summer (because there is always a lag). Interestingly we have seen this many times over the years because just about every spring for the last 20 years, we have often seen negative or very subdued figures in the House Price Indexes in the months of January/February. This is because of the lack of property sales on the run up to Christmas a few months before. To give this all some context, property values in Nottingham are 39.6% higher than 10 years ago – and nobody was complaining about those. To give you an idea what that is in pound notes …

 

The average Nottingham home has risen in value by £61,500 in the last 10 years

The swiftness of recovery in the autumn/winter from that point will depend on the state of the wider economy. With the measures (mentioned above) implemented by the Government, household incomes should continue to remain steady, and whilst holidays and luxuries may be shelved for a year, those Nottingham people who have been locked up in their Nottingham homes for weeks on end, might just consider making that move later in 2020, taking advantage of the ultra-low interest rates. This in turn ought to encourage a return to sturdier levels of house-price growth in the medium term (2021/2 onwards).

 

The Number of People Moving Home in Nottingham Will Significantly Drop in 2020

I foresee the number of people moving home (i.e. the number of household transactions) in Nottingham will significantly drop in 2020. This will only really affect the pockets of Estate Agents (as they charge their fee when people move – so if less people are moving, they will earn less) and the people associated with house moving.

 

Even with virtual viewings and creative legal work, the number of property transactions will be considerably obstructed over the next couple of months. Interestingly, in the Chinese cities that removed the lockdown first (in the middle of March) I have read in the press the number of property transactions has already bounced back to around half of the medium-term average after only three weeks!

 

This was caused by people delaying their move because of the ‘B’ word (Brexit) over the last 12/18 months, which interestingly saw a massive upsurge with the Boris Bounce in December/January and February.

 

Worse case scenarios suggested by economists state transactions will drop to 20% of the normal 10 year average number of transactions until the end of Q3 2020, return to 65% by Q1 2021, increase to 100% by the end of Q2 2021 and then 120% in 2022, yet most sensible economists (and often those that stay out of the limelight and don’t go chasing headlines), believe transactions will reduce to 45% to 50% of the 10 year average until the end of Q3 2020, improve to 80% in Q4 2020 and 100% by Q2 2021 with potential for higher transactions numbers in the order of 110% to 130% in 2022.

 

It all sounds rather grim doesn’t it, until you dig deeper…

 

Remarkably, it must be stated the number of property transactions over the last 12 months in Nottingham are only at 71.2% of the 10-year Nottingham average … and this was before Covid-19

  

In the last 12 months, there have been 7,402 property transactions in Nottingham, compared to a 10-year average of 10,398 per year

Yet, let’s not forget, these predictions are from the 10-year long term average, and as it can quite clearly be seen, transaction levels are already at a low, even without Covid-19 and nobody was complaining about that apart from estate agents and removal vans!

With the number of Nottingham people moving being held back, I would anticipate seeing a build-up of supressed demand for Nottingham property from Covid-19, on top of the pent-up demand from Brexit, especially with many Nottingham families realising their Nottingham homes aren’t large enough to contain them as the lockdown experience will push many Nottingham households to move in late 2020 or possibly 2021 …and as every economics student knows, when demand outstrips supply (because we can’t all of a sudden build more houses), prices go up.

 

How Will This Affect Nottingham First Time Buyers, Those Trading up, Downsizers and Landlords & Tenants?

FIRST TIME BUYERS - I believe the banks will be a little more wary when lending money to first buyers with their need for large percentage mortgages. The demand for the Help-to-Buy Scheme has been increasing year-on-year, yet its pace of growth has been declining in the last couple years – I foresee demand accelerating in the later parts of 2020. There could be some good deals to be had from new homes builders looking to release cash in Q3 and Q4 later in the year? Maybe the Bank of Mum and Dad might be able to help, yet they too will be stretched, although they might be able to release equity down the generations to their children and grandchildren (see the downsizers section).

TRADING UP – Many Nottingham homeowners in their starter homes will be going stir-crazy in their smaller homes, and with interest rates at ultralow levels, some Nottingham homeowners might forgo holidays and entertaining, and consider putting their weight and finances into moving up market in Nottingham. That might also be easier, if the Nottingham downsizers start to move as well.

DOWNSIZERS – There are many Nottingham retired people, rattling around their large Nottingham home, with their children having flown the nest and possibly moved away years ago. These Nottingham people don’t need to move, and so are considered ‘optional home-movers’ – yet the Covid-19 crisis could be the catalyst to make them finally move to be nearer their family around the UK – releasing good sized Nottingham family homes onto the property market for the ‘Trading Uppers’ to buy.

LANDLORDS & TENANTS – I suspect there will not be many Nottingham tenants moving in the next three to four months. Tenants have the peace of mind with a cessation on evictions until the summer and buy-to-let mortgage payment holidays for buy-to-let landlords whose tenants are in financial difficulty (note the tenants have to give proof to their landlord that they are unable to pay with their applications to Universal Credit etc., etc.,). There might be small reductions in average rents, as some Nottingham landlords undertake to help their tenants in these chastened financial times, yet for most people, rents will continue to be paid, making no major impression on rental prices in 2020.

Let’s not forget, the level of average rents is directly related to tenants wages and I can’t see why this relationship between rents and tenants wages should break after Covid-19, so as wages are held back in the latter parts of 2020 the growth rents over the next year will be subdued. Finally, those Nottingham buy-to-let landlords sitting on cash might be able to bag a bargain in the summer from a desperate seller, before normality returns in Q3 and Q4 2020.

 

Conclusion

 We are in unchartered territory, yet for the reasons explained in this article and, assuming there are no other seismic shocks in the coming weeks and months – in a few years’ time – this will be seen as a bump (albeit a rather big bump)  - another part of the roller coaster ride of the UK and Nottingham property market.

 

Kind Regards

Angela Barbaro-Robins

 

 

FINALLY- We have a result! Whether or not it is your preferred outcome, at least the confusion suffered by the UK, and the property market in particular, is at an end. Like it or not, it looks like Brexit will now formally happen on 31st January 2020 and politicians can then get on with debating other issues, as they should.

 

As far as property is concerned, D-Day has now arrived. Countless buyers and sellers,

Labour Party’s U-turn on the £1.2bn grab on Nottingham landlord’s wallets

Well, with the General Election just over the horizon and having been asked by a number of Nottingham homeowners and Nottingham buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

 

 

Are the Tory’s Selling Off the Final Part of the Family Silver?

10,931 Nottingham Housing Association Households & the Right to Buy Their Homes

 

In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their own their own council flats and houses, although it might interest you to know, that the council tenant right to buy idea was first proposed in the late 1950s and formed part of the manifesto of the Labour party. Yet Maggie’s version was based on massive discounts for tenants and 100% mortgages (i.e. no deposit). However, the real bugbear was that half the monies raised form the house sales went to central Government and the other half to the local authorities … but that money had to be used to reduce the local authorities debt rather than building new houses - so houses were being sold and not replaced.

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