The coronavirus outbreak has highlighted once again how fragile and interconnected our societies have become.
We don’t know yet how dangerous Covid-19 is, but what we do know is that it’s a powerful disruptor.
For this reason, I thought it would be interesting to analyse what we know so far, look into my crystal ball and make some predictions about how this new disease will affect society in the short, medium and long-term.
We know for sure that this disease has infected at least 90,000 people around the world, mainly in China, and that the true number of infections is likely to be much higher.
We also know it is more deadly the older you get, but the headline death rates overstate the danger as they only include reported cases. When you compare Covid-19 to flu, the death rate for which is around 0.1%, you are seeing a disease that seems to be on average 20 times as dangerous.
However, we don’t know whether that 0.1% includes an estimate for unreported cases. If it doesn’t, then the comparison between flu and Covid-19 is like for like and therefore valid.
But, unlike flu, which kills the weak whether they are young or old, Covid-19 targets the old, with the death rate climbing at a linear rate. This is why the World Health Organization is advising over-60s to stay away from crowded places because the death rate is currently believed to be 3.6% at 60 and 15% at 80.
This viral ageism also seems to affect transmission rates, which are only 2% in under 19s but much higher among the old. No deaths have been reported in those under nine, so it appears harmless to school children but could affect their teachers!
Aside from conspiracy theories about Covid-19 being designed by ‘snowflakes’ to get rid of ‘boomers’, if the findings about the virus are true, they present a greater challenge to old people individually and to us as a society.
Age may not be the direct cause of susceptibility, it may be that in general we have more weaknesses as we get older and that one or more of these weaknesses is what the virus attacks, like high blood pressure, low lung capacity, diabetes etc.
It may be that super-fit seniors with no underlying issues are not susceptible at all. It may even be that susceptibility to Covid-19 is as a result of statin use or use of NSAIDs which increase with age. I’m not suggesting this is so, just pointing out that age hides many other possible causative factors.
Enough of the risk analysis, which is sadly lacking in data, let’s move on to the effect Covid-19 has had so far and its likely future effects on society and by association the property market.
The biggest macro effect is for Covid-19 to act as an accelerant to all the main trends in society, which are driven principally by technology and environmental issues.
Covid-19 is going to put change, which is already happening at an exponentially faster rate, on the social equivalent of steroids. Specifically, this means we will see a move to work from home and a retail move away from crowded shopping centres, towards online shopping - good news for Jeff Bezos, poor guy needs the extra cash!
Although I initially feared for the high street, I now think it may benefit as it will be more hyper-local and less infectious.
Education will go online faster; air travel will be curtailed - we have probably passed peak travel - less cars will be sold etc. All these factors will affect jobs and people’s finances.
The NHS will experience a radical shake up. What could be stupider than gathering a bunch of sick and vulnerable people in a small, crowded waiting room to see a rushed and overworked doctor, when in 90% of cases the process could have been done online?
People will be expected to take their own blood pressure, keep medical records on smart devices that speak to their GP and have their medicines delivered. More complex tests will still need a visit, but there will be so much less need for a physical appointment.
One of the areas that is a little less obvious is Virtual Reality (VR). It’s why Facebook is going to do so well because it owns Occulus.
Covid-19 could easily create a transition similar to when the tablet PC was reinvented as the iPad. VR is clever, but so far it hasn’t broken through. Covid-19 could provide the tipping point for VR.
On the subject of shares and the markets, we have already seen how sensitive they are to uncertainty and how fast the speculators jump on any form of disruption to create short-term money-making opportunities. However, most of us can’t win by playing a hand that’s already over, we don’t have to tools to react fast enough and we shouldn’t try.
Much better to look at the macro trends, which means seeking out value and if you can buying, not selling, into a falling market. For example, I’m buying oil stocks because of the great yields and because in the longer term I think oil prices will rise.
I’m not bothering with gold because I think its role as a store of value was ended with the gold standard, leaving it as a largely irrelevant pretty metal that’s easy to speculate with.
Let’s face it, most people aren’t that interested in stocks and shares or speculating on financial markets, but they are interested in property. So, what does all this mean for our industry, what current changes will Covid-19 accelerate?
Before I answer this question, I want to say what I think will happen over the next few weeks. Based on infection rates so far, I think containment will fail, it probably already has, and we will move into a mitigation or delay phase.
This isn’t just defeatist acceptance and will still result in some draconian restrictions on movement and public gatherings. Companies will be affected, some vastly more than others. A few will benefit - it’s an ill wind that blows nobody any good.
Individuals who can’t work and who have no savings could be in real financial trouble very fast and not all employers will have the money or the will to support them.
Covid-19 will almost certainly send us into a recession and unlike in the last crisis, we are being told by experts that central banks may not have the firepower to help that much.
There is a potential upside, there always is. Low interest rates and low inflation have created the opportunity for the government and the Bank of England to embark on the biggest fiscal and monetary stimulus of all time.
Played boldly, this is an opportunity to not only build HS2, but to renew and upgrade our infrastructure and public amenities across the board without creating rapid inflation or devaluation.
The Budget on March 11 is therefore a pivotal moment and a chance for the new Chancellor to act decisively and get ahead of this financial crisis before wreaks real devastation.
As far as property is concerned, look for reduced stamp duty, reduced Capital Gains and maybe some relief for individual landlords.
Companies should look for reduced corporation tax and the continuation of entrepreneurs’ relief.
Individuals should look for reduced income tax and the merging of National Insurance with income tax to create a simpler unified tax.
Outside of the Budget, look or the BoE to drop interest rates and reintroduce quantitative easing, maybe even make mortgages easier to obtain.
Of course, none of this may come to pass in which case it will be another missed opportunity.
As with everything in life, it’s not so much what happens but how you deal with it that really counts.
At the macro level, this puts Boris, the BoE and our institutions on the spot. We need decisive visionary leadership to help us through this crisis with the best outcome.
At a more micro level, plenty of us with businesses to run will be faced with challenging decisions to take over the coming weeks. We will need to interpret advice and set our own polices, working from home, self-isolation and sick pay all spring to mind.
Covid-19 will have far-reaching effects on society, with more home working, the adoption of VR, less physical visits to the GP and shopping centres, the acceleration of green pressures and many other unforeseeable effects.
What will happen to estate agency? There are two major issues here, what effect Cvoid-19 is having and will have on the number of rental and sales transactions, which can only be deflated by the crisis. And what effect, if any, will Covid-19 have on long-term industry changes.
This second issue is less clear than the first. There could be acceleration towards home working and VR property tours, but I think the biggest practical effect will be to drive ineffective, financially weak agents out of business.
There is already a cull taking place, or less worryingly a ‘consolidation’, and I can see this process gathering pace.
Now more than ever, it’s essential for good agents to be open to change and take on board new and effective tools to help them attract new business.
Unfortunately, this isn’t an easy job because of the myriad of solutions out there, most of which, in my experience, don’t work, add no value, cost money and create confusion.
However, if you can focus on being brilliant at the basics while trying to see the wood for the trees, there are some tools out there that can really add value, attract new business and help you attract and keep the best people.
As Neville Chamberlain was famous for not saying: “We live in Interesting times”, and Covid-19 has demonstrated once again that we can never take anything for granted. If we want our businesses to flourish and grow, we have to respond to change and make the best of it.