It is eight weeks to the day that an unprecedented lockdown was imposed across the UK, resulting in our offices being forced to close and restrictions being placed on the freedoms we all take for granted. Since then, there have been many predictions as to how the UK economy and, in particular, the property market will be impacted by the lockdown. Whilst many predictions were gloomy at the start of lockdown, we are now starting to see light at the end of the tunnel with more positive predictions being announced. Let us take a look at some of the key factors helping the property market jump back into action.
Firstly, the Government announced last week that the property market could re-open in England, spelling the end of a seven week freeze on house viewings and home moves. This means that buyers are now able to attend viewings in person, visit estate agents and complete what were previously considered as “non-essential” moves. As expected, there are still rules in place such as conducting viewings in line with social distancing guidance and a ban placed on open viewings amongst other restrictions. That said, the fact that the property market has been authorised to re-open is welcome news which can only help with the recovery of the property market.
The data since the property market reopened is very promising and indicates that there is a high demand for property in England. Rightmove has released figures which reveal that sales enquiries rose by a staggering 50% from 12th May 2020 to 13th May 2020, the day on which the re-opening of the property market was announced. The number of visits to its site by home-movers is also at the same level as pre-lockdown with close to 5.2 million visits on 13th May 2020, a 4% increase on the same day in 2019.
Low Interest Rates
Another positive sign is that mortgage offerings have started to increase. This is likely to increase further with the reopening of the market as lenders will be able to carry out more physical valuations. The good news for those looking for a mortgage product is that interest rates are now at low levels which should further protect the property market.
It is inevitable that consumer sentiment will impact recovery. During the two-month lockdown period, there has been a build-up in demand coupled with a lack of new supply. The age-old case of demand exceeding supply is expected to have a stabilising effect on house prices which is good news for both homeowners and the economy. Predictions regarding the impact on house prices has varied massively, but the most up-to-date predictions suggest that house prices will stay relatively stable. Knight Frank has predicted that a decline of 7% in UK prices (excluding London) will be experienced through 2020, but the good news is that much of this decline has already occurred between March 2020 and May 2020. One of the key factors cited as having a stabilising effect on house prices is the furlough scheme underwritten by the Government which has protected jobs. This has had the effect of increasing consumer confidence as prospective buyers feel more secure about job security and in turn their income and ability to meet mortgage repayments.
Finally, the construction sector is starting to pick up tools and implement a phased return to site after a long period of forced inactivity. Whilst it will inevitably take some time for construction works to recover to pre-lockdown levels and there are likely to be some logistical challenges, it is certainly encouraging that construction sites are now re-opening and prioritising builds which can realistically complete in the near future. It will be interesting to see if the Government provides any support for developers to assist with their cash flow during this initial period. It has been suggested that Section 106 and Community Infrastructure Levy payments could be deferred or indeed removed in the short term to improve cash flow for developers. Another suggestion has been to extend the existing Help to Buy scheme which is set to expire at the end of March 2021.
All in all, the indications are positive. The property market is open and back to “business as usual”, albeit with a different perspective of what is usual. The predictions are that house prices will remain fairly stable and it is hoped that the impact of Coronavirus will be relatively confined in light of the finite time span of the lockdown.
If you would like to speak to someone in Jacksons about any of the issues above, please call 01642 356500/0191 2322574 in the first instance.