Whether owning or renting, everyone needs a roof over their heads. It is natural, then, that the UK media should provide a steady stream of stories on the ebbs and flows of the property market.

Fluctuations in property value, urban and rural rental prices, and the relationship between new legislation and property market dominate headlines in all forms of our media.

Indeed, house prices consume a great deal of attention. A wide range of organisations, from the ONS to Zoopla to Nationwide to Rightmove to Halifax, produce monthly indices declaring how much the average UK residential property is “worth”.

Yet the variation in the figures they publish is itself an indication on how problematic a broad, catch-all approach can be in trying to understand the state of the market.

So, with Covid-19 radically altering the property landscape, at least in the short term, we have arrived at an opportune moment to consider the fundamentals that underpin the way the property market behaves.

The principle cast

Assessed at either a macro or micro level, there are no ‘one size fits all’ rules for the property market – it is simply too varied, equally dependant as it is on big picture fluctuations and the minutiae of regional economics.

Therefore, when ascertaining the fundamentals of the market, it is crucial to identify the core principles which are consistent across this sprawling sector. For instance, the groups which are active within the market.

There are several broad groups that shape activity within a property market. Firstly, there are the owners, who own and occupy the property in question. There may instead be investors, who own the property but do not live there.

We can also identify developers and renovators in this cohort, who will usually not be in occupancy of a property, and instead seek to take advantage of the market’s fluidity. Supporting this cast are facilitators, such as agents, lenders, and the government – each plays a part in allowing the transaction of property.

While each takes a beneficiary role, they could be perceived as independent from one another – running parallel markets based on their intentions to capitalise. This would be mistaken. Shifts in the behaviour of one group will have consequences on each of the others. For instance, the UK government introduced the Stamp Duty Land Tax holiday in July 2020 to stimulate demand for house buying, which has resulted in a surge in buying activity.

Extended transactions

Relative to most products, services, or assets, the transaction of property is both time-consuming and costly.

A recent survey found that it takes more than half a year to complete the average residential property sale in the UK.

Associated fees incurred by both the buyers and sellers will reach thousands of pounds between instruction and completion – with tax another key consideration. To revisit the example of the stamp duty holiday, this highlights the balancing act between the players.

The cost and time required to complete a property sale will naturally vary by region, but the process itself will always have a guiding hand over the forces of the market.

Immobility

What sets property as an asset apart, perhaps more than anything else, may seem too simple a point to belabour, but it must be noted: neither property nor the land it is built upon can be moved.

This immobility is what supports the broader market trends we can see, but often fail to explain.

Supported by the data, it quickly became clear throughout the Covid-19 pandemic that there was an exodus of homebuyers from towns and cities in favour of rural areas. This presented a fundamental issue for buyers and sellers – there is less housing in the countryside.

It was a sudden and unexpected reversal of a trend that had been established among developers and speculators for centuries. Namely, that more and more people were living in cities; and so, they would build and buy up massive quantities of urban space.

When suddenly property buyers abandoned said cities to head to greener pastures, the market was knocked off course.

In turn, should this trend hold, it is likely to be met with a response of accelerated house building in attractive rural areas, in addition to increased renovation and extension activity. Lenders and agents will have to establish their offerings beyond their usual urban post codes. And the state will need invest more heavily in rural infrastructure.

While the UK property market continues through something of a boom, it will be easy for all parties involved to be swayed by the waves of news stories detailing house price increases. Yet the pandemic has, in its strange influencing of these market forces, shone a light on the ongoing importance of formal qualifications in the house evaluation process.

There is tremendous value in the knowledge and perception of those with recognised professional designation – including being a Member of the Royal Institution of Chartered Surveyors (MRICS) – when dealing with volatile conditions.

By broadening the availability of credible and competent skilled surveyors to assess markets and giving the fundamentals of property precedence over incidental news stories, the real estate industry will be well-placed to continue to thrive through challenging economic times.

Mark Shepherd is the course director for the University of Manchester’s blended online MSc Real Estate course. Covering valuations and appraisals, development, management, and investment, the two-year Masters is designed to help people get into and move up within the world of real estate, providing students with an in-depth understanding of how the sector functions and the fundamentals that govern it.