The world of UK property has changed profoundly since the early year optimism and increased transaction volumes. Following this brief market buoyancy, the spread of Covid-19 and the consequent social distancing regulations have brought the sector to a relative stand still.
Zoopla has calculated that more than 373,000 sales are suspended in the pipeline, waiting for the governmental green light allowing sales to progress.
Currently, homes sold subject to contract, delayed completions and viewings/sales agreed ahead of lockdown represents a blockage worth more than £82 billion to the economy.
Zoopla has speculated that transactions will reduce by 50 per cent in 2020 when compared with last year because of the delays to sales that would have progressed and two lost calendar months of transactions. Additionally, the blockage of stalled transactions will have a knock-on delay to future sales whilst property stakeholders process the blocked pipeline.
The reports also suggest that demand for housing has fallen by 70 per cent between the start of March and the end of the month. Whilst demand is starting to climb, it is still 60 per cent down on pre-coronavirus levels. Online viewings have also fallen by over a third (35 per cent) since lockdown measures froze the property market.
Whilst demand has dwindled until restrictions are relaxed, available housing stock has only decreased by 4 per cent and some of this has been attributed to estate agents refusing new instructions. With demand likely to return, property stakeholders need to consider how they will ensure transactions can operate as smoothly and efficiently as possible.
A group of conveyancers have argued that business as usual when processing post-lockdown pent-up demand may lead to further delays, longer completion times and frustrated buyers and sellers. They have argued that encouraging estate agents or conveyancers to urge sellers to create ‘sale ready’ packs prior to any buyer interest could shave 2-3 weeks off the time it will take to exchange contracts.
FDR Law, among a group of other law firms and agents, are encouraging their buyers to complete pre-contract information and due diligence. This could mean ordering title documents, leasehold information and searches in advance of buyer interest will ensure greater efficiency and allow documentation to be sent to the buyer’s lawyer immediately after a sale is agreed.
Richard Donnell, Director of Research & Insight, said:
“There is a two speed housing market at present. Parts of the market are at a virtual standstill as a result of the physical restrictions that have stopped new supply coming to the market and the viewing of homes for sale. However, the online browsing of homes for sale and buyers expressing interest in property have been rising off a low base over the last two-three weeks. Demand for housing is still 60% lower than at the start of March, but we expect interest in housing to continue to improve slowly. Northern cities have seen the strongest improvement in underlying demand although levels remain half those at the start of the crisis.
“Sales continue to be agreed in low volumes by purchasers who viewed homes ahead of the lockdown, but there is a large pipeline of agreed sales held up by the temporary suspension of the sales market worth £82bn. In addition, these sales will generate associated spend resulting from housing transactions that can stimulate economic activity.
“Without doubt, once the coronavirus restrictions are relaxed, we should expect the release of demand that has been building since Brexit and political uncertainty destabilised market sentiment. That said, the case for a stamp duty holiday to support a resumption of market activity is clear and a high proportion of savings are likely to be spent, further stimulating economic activity.
“We expect completed housing sales in 2019 to be half of those in 2020, having lost close to two full months of market activity by mid-May, and taking into account time for agents to rebuild sales pipelines.
“Many households have spent more time at home in the last few weeks and some may feel the urge to move and find more space or consider the potential for remote working. This could boost activity in the second half of 2020, but this all depends upon how much the economy is impacted over the rest of the year and the impact on levels of unemployment. It is too early to register any pricing impact given new sales volumes are 90% down on the start of March. Demand is rising but there is a long way to go until we see a return to typical levels of market activity.”
Given the fact that two months’ of transactions may unleash shortly after lockdown measures are eased, should the early stakeholders in the process ensure that all administrative burdens have been considered to help reduce further delays and create an efficient home buying and selling process?
