Bleak headlines concerning the residential property market are abundant, but at Irwin Mitchell we focus on the positives. Here are five ways we've seen improvements and we’re hopeful better news is on the horizon.
Mortgage products are on the rise
The first weeks of the lockdown saw some lenders removing products, withdrawing mortgages with high Loan-to-Value (“LTV”) ratios as banks and building societies assessed their long-term economic risk. Mortgage software solution provider, Mortgage Brain, has reported an increase in available products from lenders for the last two weeks. Nationwide and Halifax have relaunched their 85% LTV products which shows increased confidence in the market, speculations are that other lenders will follow.
The market was good before and the buyers are still looking
House prices grew 3% in March (before the lockdown) and showed growth at its fastest since January 2018. The ‘Boris Bounce’ was evident as buyers, once uncertain over Brexit and the election, were emerging into a stable market. Evidence is that these buyers remain and are out looking for their next property.
Following the Prime Minister’s announcement of the lockdown on 23rd March, Rightmove visits fell by 40%, but are currently only 20% lower than usual. Buyers are using this time to research, utilising their exercise time to scope out nearby properties and taking to online resources to find out about areas for future home moves. Moreover buyers are not abandoning the transactions which have been unable to complete. Miles Shipside, Rightmove director and housing market analyst stated: “Agents report that there is good co-operation, with both buyers and sellers keen to hold deals together. While some buyers may express concern over the possibility of short-term dips in house prices, many are taking the longer term view and living up to their commitments to proceed.”
Innovation and change of working practices – the industry is set for change
The coronavirus crisis will likely be one of the greatest change catalysts for the residential property market. Desktop valuations and virtual viewings may become the norm. You may meet with your conveyancer through video conference and sign your contract using a digital signature, and this could lead to an improved and efficient home buying process.
What of residential property itself? Home-owners will have different demands to pre-coronavirus times - broadband connectivity, home working space and extensive gardens. These changes may be a short-term trend or have long-term effects, but it’s certain that changes are afoot and these are exciting times.
A renaissance for rural areas
The Evening Standard Homes & Property section has reported an increase in the searches of rural properties, a claim supported by Rightmove and various estate agents.
Many people are considering a lifestyle change, and having now experienced the advantages of homeworking, may no longer wish to commute into London five days a week. This means they may consider a property further afield, making the most of their budgets to acquire bigger properties with more countryside surroundings. Usually such area have tighter planning restrictions and fewer new-build developments and supply may be short, leading to an increase in property prices in these areas.
Christopher Scott, Hamptons International area sales director for Banbury, agrees: “If home working becomes the new normal, we could see younger people moving that bit further out, still close enough to travel into the capital when they need to, but far enough out to buy a better lifestyle.”
Construction is starting again
The construction industry is showing that where there’s a will there’s a way with housebuilders Taylor Wimpey, Redrow and Bellways announcing the reopening of the majority of sites in early May. The former has announced the reopening will be conducted “in a safe, managed and phased way to comply with strict social distancing requirements on a sustainable basis” and has designed and manufactured special face shields which can be attached to hard hats to pursue this aim. It is likely other residential property builders and developers will follow shortly.
Many of our own clients are very definitely open for business, and indeed we have recently exchanged contracts on a number of new-build or vacant properties.
Agents report that there is good co-operation, with both buyers and sellers keen to hold deals together