Taylor Wimpey (TW.) and Crest Nicholson (CRST) have become the first major housebuilders to announce plans to reopen show homes and sales sites after the government released guidance giving the green light for property moves and viewings.
Estate agents offices can open and market new properties, buyers and renters can view properties physically and removal companies are permitted to restart work. The UK housing market was effectively frozen at the end of March when the government issued guidance encouraging buyers and sellers to delay transactions to comply with social distancing measures.
At the end of April, property search portal Zoopla estimated that 373,000 property purchases worth £82bn had been stalled since the start of March and although the total number of properties for sale was just 4 per cent lower, it forecast that overall sales transactions for the year would be 50 per cent below 2019.
The UK’s housebuilders have reported a plunge in sales rates following the closure of sales sites at the end of March. Taylor Wimpey, the second largest housebuilder listed in London, reported a net private sales rate of 0.3 homes per outlet per week since lockdown was introduced, compared with a sales rate of 0.96 in 2019.
Despite limitations remaining, such as one person viewing a property at a time, the reopening of show homes and recommencement of viewings will likely provide a boost to property transaction levels - but obstacles remain.
While some lenders including Halifax and Nationwide last month relaunched mortgage deals offering loan-to-value ratios of 85 per cent, the number of products on offer to borrowers at the start of May was less than half that two months earlier, according to data provider Moneyfacts. That drop in choice has been most keenly felt at the end of the market offering LTVs of 90 per cent or more.
Yet even if mortgage availability does increase as physical property valuations become easier, the dire UK economic outlook and inevitable rise in unemployment will likely weigh on both demand and house prices.
For existing homeowners, low interest rates could prevent forced sales at depressed prices due to a lack of affordability, said Andrew White, head of UK residential at Colliers International.
However, for housebuilders, a reduction in demand could potentially weigh on prices, he said. “Will they get towards the end of the year and be looking at discounting stock because they have got a year-end coming up and they need to rationalise cashflow?” he said.
The uncertainty around just how much prices will fall is reflected in widely varying industry forecasts. While Knight Frank said in April it expected an average decline of just 3 per cent by the end of the year, the Centre for Economics and Business Research put the figure at 13 per cent.
