Property UK: Coronavirus doesn’t seem to have scared off buyers and sellers…yet

Property UK: Coronavirus doesn’t seem to have scared off buyers and sellers…yet

In their latest monthly house price index released this morning – which this month, doesn’t contain any data around prices, for reasons we’ll return to in a minute – Rightmove’s report suggests that home mover interaction with the website returned to pre-lockdown levels on Wednesday, with almost 5.2 million visits, an increase of four percent on the same day a year ago. Data on property for sale is still rather thin on the ground though, as the number of properties coming to market is still down 90 percent on the same period a year ago.

But the report also points to a leap in new properties listed for sale on the day that estate agents were able to return to work, with an increase of 111 per cent week on week.

This has been balanced with buyer demand, as unique enquiries via the website doubled from Tuesday to Wednesday which significantly, was only 10 percent below the same level of buyer enquiries on the same day in 2019.

This all tentatively points to the number of buyers returning to the market aligning with the new supply of properties available for sale. If this continues, the delicate balance of stock versus demand could help to support stability of property values, and therefore avoid dramatic price falls in the coming months.

It’s too early to call, clearly, but many in the industry are cautiously optimistic this may prove to be the case.

The question is though, what does this mean for property values right now? Usually, the Rightmove index is seen a reliable barometer of the future direction of travel for the property market, as it provides a consolidation of asking prices across the UK.

READ MORE: Housing market reopens: What will happen to house prices after COVID-19?

Of course, an asking price isn’t a sold price but nonetheless, as a temperature check of consumer sentiment it’s deemed to be one of the most reliable.

However, as the English property market makes its way out of enforced hibernation, Rightmove isn’t providing an update on asking prices this month. Analysts from the site confirm this is because there weren’t enough properties listed for sale over the past four weeks to accurately measure any movement.

While that’s understandable, it means that it may well be June or even July before we get an up to date perspective on how values have fared.

Given the current economic backdrop, with millions of workers on the Furlough scheme and the potential for unemployment to rise significantly before the end of the year, this resurgent consumer appetite for property may sound surprising.

Miles Shipside, Rightmove director and housing market analyst explained: “The traditionally busy spring market was curtailed by lockdown, but we’re now seeing clear signs of returning momentum, with the existing desire to move now being supplemented by some people’s unhappiness with their lockdown home and surroundings.”

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Miles added: “We expect consistent momentum to rebuild over several months rather than weeks. With no new seller asking price data it’s too early to comment on price movements, though high demand is needed to support a stable market.”

While pent-up buyer and seller activity appears to be evident, there are substantial practical challenges to be overcome. Buyers, sellers and estate agents need to adapt immediately to the biggest ever changes in how properties are marketed and viewed to ensure stringent social distancing to ensure the safety of all involved.

To control the spread of Covid-19, the government released specific guidelines for the property sector this week, including stringent social distancing measures. These include the recommendation that initial viewings should ideally be virtual, with readily available technology allowing the use of a variety of video options.

Virtual viewings enable potential buyers to conduct initial ‘real time tours’ of the properties they are interested in from the comfort and safety of their own home. Once they have identified a shortlist, physical viewings of the properties they are the most interested in can be arranged, in strict accordance with the new health and safety legislation.

Miles Shipside observed: “These guidelines are understandably stringent to make sure the process can be carried out safely. It’s especially important for the recovery of transaction volumes that prospective buyers and existing and future sellers feel reassured enough to re-engage with their pent-up housing needs, but safety is the top priority for all and so it will take time. All parties will have to be innovative to work effectively while adhering to these guidelines.”

For the most part, Robert Jenrick’s announcement this week took the property industry by surprise, as initially it was anticipated that estate agents would not be able to resume physical visits to homes to undertake viewings and valuations until early June.

The last few days have seen a flurry of activity as estate agency offices and branches have been prepared to re-open under the government guidelines, as well as sourcing the necessary PPE to equip staff and customers at face to face meetings.

Guy Gittins, Managing Director of London estate agents Chestertons cautioned: ”This is great news for the many thousands of people who need to move home but, as the government is keen to stress, this is not a return to normality and everyone has to adapt to the current situation.

“Physical viewings and valuations can now take place, but video viewings will remain a major feature for some time to come and people are urged to make use of them in the earlier stages of their search and only physically view properties if they are genuinely interested and able to place an offer.”

Guy also confirmed that, under the new rules: “Any visitors to people’s property throughout the sales process – including the estate agent, photographers, interested buyers and surveyors – will need to confirm that they are not experiencing any symptoms and then be asked to adhere to strict guidelines aimed at maintaining social distance, avoiding physical contact and minimising the risk of spreading the virus.”

Could all these health and safety measures put buyers and sellers off? There will, of course, be many who may decide to wait a few weeks, however former RICS residential chairman Jeremy Leaf is cautiously optimistic.

He suggested: “It will take time to build momentum and for the market to become fully operational as we all adapt to the new normal. Encouragingly, we have seen sales continue to completion this week and in recent weeks without price renegotiation, often due to the underlying desire to take advantage of rock-bottom interest rates.” 

Jeremy added: “Hopefully, lenders will honour pre-lockdown mortgage offers and surveyors will again feel relatively comfortable about revisiting properties, which will allow sales on hold to proceed.”

Tomer Aboody, director of property lender MT Finance suggested banks and building societies: “Will hopefully be more innovative and flexible around mortgages, which will allow buyers to move and be proactive, while also being comfortable to borrow.”

Tomer concluded: “The government re-opening the market is really positive news and is evidence there is a realisation that property is the heart and soul of the UK economy.”

Follow Louisa on Twitter: @Louisafletcher

Published at Fri, 15 May 2020 23:01:00 +0000