The housing market has re-opened to a promising start in England. There is cautious optimism as new regulations have been embraced and practices modified. The changes made to accommodate the COVID-19 pandemic have been many and the industry has proven to be resilient and flexible.
Restrictions began to ease three weeks ago with comprehensive guidance published by the Government. This document is frequently updated. Pan industry guidance from the Royal Institute of Chartered Surveyors (RICS) has supported the return to work of thousands of support professionals who play a critical role in the housing sector, specifically on physical inspections for mortgage valuations and home surveys. The document that outlines safe practices is relevant to property agents, lenders, mortgage advisers, property lawyers/conveyancers, surveyors, energy assessors, property managers, home removal and associated professionals such as contractors involved in the property development, management and the home moving processes. Ensuring social distancing practices are adhered to has proved key to re-opening safely and to regaining buyer confidence.
Surge in buyer demand
Buyer demand across England surged by 88 per cent after the housing market reopened, figures from Zoopla show (correct as of 27th May 2020). The website detailed that almost 60 per cent of buyers in the UK are planning to continue with their search for their next property. Although, 41 per cent said they have put their plans on hold with loss of income, uncertainty in the market and lack of confidence in future finances given as reasons for this decision.
Richard Donnell from Zoopla commented:
“The scale of the rebound in demand for housing is welcome news for estate agents and developers, but it is also surprising given projections for a sharp rise in unemployment and a major decline in economic growth. Many households are likely to have re-evaluated what they want from their home. This could well explain the scale of the demand returning to the market.”
Brokers were unfurloughed and advisers returned as mortgage market activity increased. As solicitors returned to near pre-lockdown levels, completion dates are now being set and purchases progressed.
Searches for products and mortgage deals across the housing market started in earnest and the number of product illustrations downloaded by brokers has increased for the fifth consecutive week, data from Mortgage Brain reports. Mortgage Brain highlights a number of interesting facts (data correct as of 3rd June)
- Over the past seven days the number of European standardised information sheets downloaded by mortgage advisers increased by 11.5 per cent.
- Volumes have increased by 27.7 per cent since the housing market formally reopened three weeks ago and by 43.7 per cent from the lowest point seen in the week ending April 26.
- However, ESIS downloads are still down by 23.7 per cent on the nine-week average to March 16.
- The number of available mortgage products now stands at 8,635, which is 2.2 per cent higher than last week and 16.3 per cent higher than the low point in the week ending April 12.
Kevin Roberts, director, Legal & General Mortgage Club notes also that there are many promising signs:
“We saw lenders …returning to 90 per cent LTV and my conversations with advisers across the market suggest that they are seeing positive interest from clients as well. Our data also shows that adviser searches on behalf of a wide range of customers, from first-time buyers through to landlords, are increasing too.”
Henry Knight, Managing Director of Springtide Capital commented:
“The initial surge in the market is a welcome sign. The substantial amount of effort to make this happen whilst securing the safety of all parties is a huge achievement. All involved in the industry, my own staff included, have proved to be flexible and resilient in adapting practices and procedures in line with regulations throughout the COVID-19 pandemic. It has been inspiring to see the dedication from all involved, and to see how the market continues to evolve to meet the unprecedented situation we have all been faced with”
First-time buyers and key workers and will be able to buy new-build homes with a 30% discount under a new scheme being proposed by the Government. It will be designed to help people in areas of high demand, who would be unable to afford to buy a home locally without the discount. It is anticipated that it will enable first-time buyers in England to save an average of nearly £100,000.
The government consultation for the design of ‘First Homes’ is currently underway. Key workers, such as nurses, police officers, firefighters, and teachers, as well as armed forces veterans, will be given priority to take advantage of the initiative.
There is no doubt that it will require time and patience for the market to fully recover. There is much uncertainty about what lies ahead and many pressures we face are still present. Economically we will face significant challenges. Some areas of the market may take longer to bounce back than others, for example purchases by overseas clients will remain slow until travel restrictions are lifted. But there are also many positives and the way we have reacted and adapted within the industry is heartening. There is much liquidity in the market, lenders are keen to lend, backlogs have been cleared and initiatives are present to help those with financial challenges. As an industry we have pulled together successfully and are ready to help buyers with their next steps.