We’ve entered a new stage in coronavirus crisis. Some call it the easing of lockdown, others (mainly just those in Whitehall) call it ‘the second phase’. Whichever you favour, with the UK government announcing a partial easing of lockdown on measures on Sunday, it’s clear we’ve started, albeit very cautiously, down the long road back to something resembling normality.
As the government advises some elements of the economy, including, crucially construction workers, to return to work where possible, where does this leave the conveyancing sector? Of course, we’re a long way from where we were in late 2019, or even early 2020, but where do we currently stand.
The part of Sunday’s announcement which will have provided most cheer for the property sector is the advice for construction workers to return to work where possible. At the start of the lockdown period, many had feared the supply of new build properties could be hit for years to come.
While it’s true that most construction sites have been closed since late March, as things currently stand, disruption may be much less than initially feared. Some developers such as
Taylor Wimpey, Persimmon and Redrow, plan to tentatively reopen this month, with extra safety measures in place. And, provided we don’t experience a ‘second wave’ forcing the resumption of lockdown measures, the supply of new houses could emerge from the crisis at only slightly lower levels than it went in.
However, obvious concerns about how ‘under control’ COVID-19 really is aside, there’s something else worth mentioning. Building materials. Although, many construction manufacturers and suppliers have weathered coronavirus surprisingly well, disruption to supply chains could continue for some time yet. This is particularly true of those businesses dependent on imports from China and other international markets.
What about prices? Well, that depends on who you listen to. Savills has predicted falls in London of between 5 and 10% for the rest of the year, (although it also expects a 15% rise over the next five years. It also says property searches on its website are up 16% in recent weeks, and now stand 7% higher than before the current crisis began, promising a relatively swift return to normality.
The BoE, however, predicts a 16% fall for the rest of 2020, which would put us in 2008 territory. Yet some commentators, most notably two analysts on CNBC, suggest that UK house prices will only fall ‘modestly’ in the next few months.
The truth is we just don’t know. If the lockdown is extended into the summer things will begin to look very different and the industry will be forced to re-forecast. But, equally, we could also be looking at something approaching normality by the end of the summer. In such a changeable environment, coming up with any concrete predictions is tough and a little unwise.
Lastly, transactions numbers. Rather predictably, they continue to fall as lockdown eats into another month. Property portal Zoopla suggests around of 373,000 purchases are on hold due to COVID-19, and estimates put the value of these transactions at £82 billion. On top of this, it also expects transactions numbers to be half what they were in 2019.
Meanwhile, Knight Frank is predicting the number of home sales in 2020 will decline by £526,000, a drop of 38% on 2019.
While that makes for gloomy reading, it’s important to stress that there are also a few causes for optimism. Firstly, because at some point, be it in late 2020 or early 2021 things will start moving again. When they do, conveyancers everywhere will have a backlog of stalled transactions to work through, as well as all those potential buyers who put it off due to COVID-19 uncertainty.
Second, the new build market could soon be open for business again. Many estate agents have begun offering virtual tours to buyers to get around social distancing rules. What’s more, as we mentioned earlier, the construction industry is clunking back into gear, promising at least some supply of new homes.
And, finally, discussions have begun about what we can do to get things moving again even if social distancing rules remain in place for the rest of the summer. The conveyancing industry has innovated in the past to deal with challenges, so perhaps it’s time we did so again. The new normal might not look much like the housing market we all recognise, but maybe this presents us with an opportunity to do things in a greener, leaner and more efficient way?