Back when I was a student in the early 1990s, I remember watching a slapstick comedy with Joe Pesci, in which he played an unscrupulous slum landlord. It wasn’t the greatest film in the world. I didn’t even remember the title until I looked it up just now (The Super), but there was a line in it that always stuck with me. Pesci was lecturing somebody about the three things always to look for in a property. I was expecting him to say, “location, location, location”, of course. The gag was that, instead, the character, bereft of all humanity, said, “death, destitution and divorce”. Sadly, the Pesci character was right. The ruthless property buyer will often get a better price if there is death, destitution or divorce involved on the sell side. And I am afraid the terrible tragedy of Covid-19 is that we are going to be seeing rather a lot of all three Ds in the months (hopefully not years) ahead. This time the UK housing market is in serious trouble We don’t yet know what the Covid-19 death toll will be, and estimates vary wildly. Professor Neil Ferguson of Imperial College, the government’s key adviser, outlined one scenario in which the figure would reach half a million, and another scenario in which it would be 20,000.

So far the figure is 1,789, although there is a substantial grey area: some have died of the virus, but others with it. The virus might have accelerated things, but was not necessarily the primary cause of death. I don’t know where to start with the destitution. So many have lost their jobs or their businesses. The value of investments and pensions has been decimated. There might be some businesses which have actually benefited – supermarkets; tech companies that aid remote living and working such as Zoom; and Getty images and Shutterstock are having a field day, I gather, now that filming has been halted – but these are exceptions. The fallout has shown just how dependent we all are on each other, and how much upset can be caused by disruptions in supply chains. Economies need human beings to move about, to congregate, to trade and exchange – and for the time being, that is not possible. Then there is the third of Joe Pesci’s ‘Ds’ – divorce. “Literally” is an overused word, but, literally as I was writing this paragraph, a friend texted me to say that her sister, one week into lockdown, is asking her husband for a divorce. Many couples are going to emerge from the lockdown closer than ever before, but many others are going to divorce as a result. Divorce and separation rates are going to spiral. Prosperous times lie ahead for divorce lawyers. We have then, Pesci’s perfect storm: death, destitution and divorce – but at a national level. It does not bode at all well for the housing market.

The market is already effectively frozen, as John noted the other day. Viewings are not allowed; the government has urged that transactions and mortgage offers be put on hold; removal companies have, I gather, all but shut up shop; and lenders have pretty much scrapped all mortgages where equity is below 40%. It’s probably a sensible move to reduce risk in this way, when future incomes look so uncertain. Property website Zoopla said that demand in the week to 22 March fell by 40% from the week before and predicted that housing transactions would drop by up to 60% over the next three months. One week on, those estimates look conservative. Here’s why this is different to 2008 After 2008 – the last time the world faced a crisis of such scale – many thought that the British housing market would follow the same pear-shaped route as the American market. It did in parts of the country, but in others, the south-east especially, there followed a boom that took people’s breath away. Several factors drove it. The cheap pound resulted in an influx of foreign buying, especially from Asia. Interest rates were slashed, meaning that money became cheap and mortgages easy to service. Lending might have tightened for some after 2008 – particularly at the lower end of the market – but credit was a lot cheaper for those who could get hold of it. So, unlike the crash of 1989-1993 there were few forced sellers, which meant very little extra supply hitting the market. Meanwhile, the cost of moving and the difficulties of arranging new mortgages meant that many more chose to stay put and perhaps improve their current accomodation. That put more pressure on supply.