Many Oxford landlords are asking my view of the property market outlook, and to be totally honest, I think I and other commentators are largely guessing as there is no historic precedent from which to draw lessons learned. To summarise my view, I’d say that the longer the current lockdown continues the greater the negative impact will be on the economy as a whole and on Oxford’s housing market.
Oxford has a diverse local economy combining: knowledge-based services e.g. research, academia and publishing; Medical sciences; a large public sector; and production industries and specialist engineering. The City’s economy has proven itself to be resilient in the past, and I expect it to escape the worst economic impacts of Covid-19.
Increasingly, it seems to me that the housing market can rebound quickly in Oxford if the city avoids a significant increase in unemployment which will undermine housing markets in other regions.
I expect academic and medical ‘tourism’ to re-establish quickly as delayed courses, placements and research programmes are re-scheduled. This will create positive momentum in the lettings sector. House sales seem likely to remain subdued for several months while buyers and sellers regain confidence about their income and ability to afford increased mortgage repayments.
If the UK economy avoids a spike in general inflation, rents will be impacted by void properties that failed to find tenants during the lockdown and early post-lockdown period, and as a result, I expect rent increases to remain subdued for 12 months.
If, however, inflation takes hold in the UK economy, investment in housing and other assets will increase as investors and owner-occupiers seek to protect the value of their savings. If Oxford avoids a large increase in local unemployment and if inflationary pressures build, I believe the local property market will bounce back more quickly. Conversely, if local unemployment is higher and the UK experiences deflationary pressures, the market will take much longer to recover.