London Property Market Update | Life After Lockdown
Now that the UK government has started easing restrictions on stay-at-home orders, “life after lockdown” has begun. But what does that mean for the London property market? In this article I will talk about real estate and the housing market in London, and the changes that have occurred. We take a look at where house prices may end up in 2020 and consult the property experts for their projections, as well as what to expect as a buyer or as a seller when arranging viewings.
Over the last several years I’ve worked with a lot of buyers and sellers to help them achieve their real estate goals. Whether it’s a buyer or seller, information is so important and critical, especially the latest information and now more than ever it is so important to get the latest information because in this era of coronavirus data is changing all the time and buyers and sellers really need to know the latest, so in today’s article, we will review the current London property market as the UK government has recently given the green light to estate agents to open up operations again and this is after several weeks of lockdown but this definitely does not mean that this is going to be business as usual.
For me and the rest of my Keller Williams colleagues, it means putting safety first and making sure that buyers and sellers feel safe when entering a home. First, let me give a quick market snapshot before we dive into the differences or changes you might experience if you are a buyer or seller now in this current era.
First off conventional price indexes have become virtually meaningless as the property market was so abruptly shut off back in March. The Office of National Statistics has even suspended its UK price index from April until further notice so we don’t have a traditional benchmark of data that we normally would.
Rightmove, which is a major property portal for listings, showed that the average price of properties coming onto the market in April dipped by 0.2% to £311,950. By contrast in April of last year UK house prices and increased by 2.1%.
While it might be a buyer’s market for some time, here in London we continue to have a unique dynamic where sellers actually don’t have to sell so that will continue to be a gap between asking prices, offers that are reduced from that asking price on the part of buyers, and then the possible acceptance or rejection by sellers. Many sellers might reject an offer deemed too low and not to continue to market that property or remove it from the market altogether.
There is a wide range of estimates as to the level of property price declines to be expected. While the Centre for Economics and Business Research predicts that 2020 prices will be down by 13% “as a lack of transactions, high uncertainty and falling incomes take their toll”, a third of valuation surveyors are predicting that price falls may be limited to 4% or less. Areas with more resilient jobs market will likely have property values hold up better than other areas.
Looking towards the rest of the year, we will likely have low inventory levels as fewer new builds are delivered and it is estimated that up to half a million transactions will have been lost due to COVID-19. As interest rates continue to stay low with the Bank of England base rate at just .1%, this may mean while there might be fewer buyers due to employment concerns, there may be fewer properties flooding the market so there may not be a dramatic reduction in prices.
Some interesting dynamics that may come into play for buyers:
· People may seek to move further out and get more space for the money as working from home becomes more acceptable and standard
· Demand for outdoor space in the form of gardens and balconies
· Buyer confidence in the employment market
For those buyers that are going to be out looking, they should expect more restrictions on accessing properties. For my side, we will be conducting 3D virtual walkthroughs on all properties and as this 3D dollhouse shows, the experience is pretty cool.
I will continue to work from home so my interaction with others will be minimal and our steps for conducting viewings will be:
1. Prequalify buyers
2. Video walkthrough with buyers to preview properties virtually first
3. Ahead of booking an in-person viewing, prospective buyers/tenants will have to sign a questionnaire about health and acknowledge the rules of the viewing
4. At the property visit, vendors and occupiers will be asked to leave the premises
a. and to leave all lights on
b. open internal doors and necessary cupboards
c. open windows for ventilation
5. I personally or a team colleague will attend viewings and go in first to make sure everything is ready
6. Prospective buyers/tenants will be
a. Asked to remove shoes
b. to wear masks and gloves and
c. maximum of 2 people in the property, with no children permitted.
d. No touching
7. At conclusion, they will be allowed to wash hands or use hand sanitizer.
8. I will close up directly.
For Market Appraisals, we will do a video consultation first. If we need to visit the property, we ask that minimum of 2meter social distance is maintained and minimal conversation is conducted face to face. I will of course be in PPE and ask that vendors are adequately covered as well.
Beyond estate agents, the Royal Institute of Chartered Surveyors is working on guidance for its members. This is relevant when an offer is agreed and a buyer needs to book a survey as part of the due diligence or conveyance process.
British Association of Removers is also providing guidance to its members advising them of what they should and should not do.
So I hope you’ve found this article helpful in getting a better sense of the current London property market and the changes that are being made during the coronavirus outbreak. There are lots of changing happening but the property market is still critical and we can assist with anyone looking to buy or sell.
Nobody knows if the housing market may crash, but so far we’ve seen an uptick in activity. Buying a home can be stressful, so make sure you get the latest information to make the right decision.
