Opinion: gimmick to 'catch keys dropped from space' shows how crazy our housing market is

Not even the pandemic has put the brakes on our property market – and buyers are getting increasingly desperate.

If you need help with buying a property, then this week it might be worth looking to the sky.

Property buyer firm GoodMove is this week running a promotion that is mind-boggling in the extreme.

It is launching a pair of keys into the atmosphere ‒ into actual space ‒ today (19 January), which will land back on British soil on the same day.

If you manage to get your hands on those keys, then the business will hand you a whopping £10,000 to put towards a deposit on a new home.

There is a phone number on the keyring that the winner can call, in order to share their details and bag the money.

You can even track the progress of the keys on the GoodMove website, presumably to help you with your key hunting. 

Yes, it’s all a bit of fun and certainly a different way to get some attention on the GoodMove business.

But as demonstrations of the craziness of the housing market go, it will take some beating.

Pandemic? What pandemic?

Many industries have had a tricky couple of years off the back of the pandemic.

Hospitality for example has struggled to an incredible degree, with people unwilling ‒ or outright banned ‒ from doing things like going out for a meal or heading to a cinema.

The travel sector has also had a dreadful time, as heading off on holiday has been difficult if not impossible for large chunks of time.

Yet the housing industry has had a pretty bumper time of things, even with the challenges presented by the pandemic.

It turns out that sitting at home all day convinced us that actually, we’d rather like to live somewhere else, particularly those people who were paying a premium to live in a city who suddenly found they were paying more for a small property, with none of the benefits that come from city life.

Throw in the allure of the Stamp Duty holiday and the promise of reducing the tax incurred when moving home, and thousands decided to take the plunge.

Activity levels rocketed, and with it house prices were forced upwards.

The scale of those increases really is incredible. According to the latest house price index from the Office for National Statistics, house prices jumped 10.2% in the 12 months to October 2021. 

To put that into context, the average property grew in value by £24,000 to a new record high of £268,000.

And incredibly, even though the Stamp Duty holiday is now a thing of the past, reports are that while activity has dropped off somewhat there remains no shortage of demand from buyers.

In other words, while prices aren’t going to enjoy double-digit growth again this year, they aren’t going to fall either.

Slim pickings

A big factor in that apparent guaranteed house price growth is the lack of supply.

There simply aren’t enough homes on the market to meet the demand of potential buyers, and the situation is actually getting worse rather than improving.

According to recent figures from Propertymark, the average member estate agency branch has 571 potential buyers on their books.

At the same time, the supply of properties has dropped to an average of a paltry 20 per branch, a new record low.

That’s a staggering disparity and means that it’s a complete bun fight whenever a half-decent property hits the market.

Little wonder then that in November more than a third of properties sold for more than their asking price.

I need a deposit miracle

Obviously, as house prices jump, it makes it all the trickier for would-be homebuyers to actually go through with a purchase, particularly if they aren’t already on the housing ladder. 

Saving a sufficient deposit is a big hurdle for first-time buyers, and it only becomes more difficult to clear when prices rise like this.

A study by Nutmeg at the start of the year found that it now takes the average first-time buyer five years and four months to save a 10% deposit, up seven months from back in 2017 when the Lifetime ISA ‒ a form of savings account which is supposed to make it easier to save a deposit ‒ was launched.

The Lifetime ISA of course is not an isolated example of a scheme launched to provide people with help with their deposits.

The Help to Buy scheme for example was supposed to help buyers get onto the ladder with only a 5% deposit, though as a House of Lords study found last week, its one big success was in pushing house prices northwards.

And last year the Government announced a mortgage guarantee scheme, with the aim of incentivising lenders to offer more 95% loan-to-value mortgages.

Of course, the trouble is, whenever the authorities come out with one of these schemes, they only make things harder for buyers of all kinds in the future.

The only idea the powers-that-be ever have when it comes to housing is to boost demand, which given we already have an undersupply of housing, only pushes prices higher.

We have apparently reached the stage where hopeful buyers are encouraged to catch a parcel falling from space in order to lower the cost of homeownership.

At some point, it surely has to click with the authorities that far more needs to be done to improve the rate at which we build homes, and crucially homes that buyers actually want.