How the property market will emerge from its coronavirus lockdown deep freeze is not completely clear, but it is expected to look very different to home buying as usual.
The pandemic has seen strict measures introduced by the Government, including a ban on moving home – unless absolutely necessary or into an empty property.
But as surveyors plan a way to do socially-distanced mortgage valuations and online viewings start to take off, the National Association of Estate Agents expects the housing market will re-open for business – in some way at least – in three weeks’ time.
So, what could this look like and what are the keys to unlocking the property market? We spoke to a range of property experts to find out.
Viewing homes has been impossible in most cases due to social distancing
The process of buying and selling a home was brought to an abrupt halt as the lockdown took hold.
The nation was told to stay at home and buying or selling a home was not deemed as something that should go on the essential business list.
In fact, the Government went so far as to explicitly advise people already in the process of buying a home to pause if possible.
It said: ‘Where the property is currently occupied, we encourage all parties to do all they can to amicably agree alternative dates to move.
‘Where the property being moved into is vacant, then you can continue with this transaction.’
There is also the Coronavirus Act 2020, which saw ministers ban evictions, which means tenants should not have to move if they are unable to pay their rent.
After six weeks in lockdown, Britain is now trying to work out how to get back to business and moves are afoot to get the property market back up and running, with socially distanced measures put in place.
However, there is justifiable concern that the economic impact of coronavirus could seriously dent demand to move home and people’s willingness and ability to pay the same prices as before the crisis hit.
This has led to calls for a stamp duty cut to stimulate the market and the suggestion that the type of homes people are looking for – and how they may seek to initially look round them – will change. In future, it might be that a virtual viewing becomes an essential first option for prospective buyers.
How the property market will emerge from its current deep freeze is unclear
The rise of the virtual viewing
Virtual viewings have long been talked about as being on the cusp of taking off, but it has never really happened. Now that people aren’t allowed to go look at properties, however, the game has changed.
The viewings that appear online now are a mix of professional and amateur. Some high-end agents are producing full-on virtual tours, where you can navigate through the whole house, while other properties are getting the home movie treatment.
One way that virtual viewings have become so accessible is via video tabs on property websites such as Rightmove, sitting alongside the more familiar map and floorplan tabs.
Homeowners have been able to film their own videos taken on their phones during the lockdown, and have them uploaded onto the site by their agents.
Such walkabout video tours can be helpful for potential buyers to get an insight into a property until it becomes possible to do physical viewings once again.
In particular, they can help buyers assess whether properties in areas they may not have considered before the lockdown could work from them.
Buying agent Henry Pryor suggests that virtual viewings could become the new norm.
He said: ‘I don’t think that it will be businesses that hold back. Estate agents, for example, will be eager to arrange physical viewings again.
‘But I expect that buyers and sellers, landlords and tenants will be more circumspect and will take some time to be comfortable in a stranger’s home or with strangers wandering around their property.
‘Forget ‘have you got the money?’. ‘Have you seen the video tour we have on our website?’ is what I expect anyone to be asked before they make a viewing appointment.’
Some agents are even doing virtual valuations for those gearing up to sell once lockdown is lifted.
Andrew Perratt, of estate agents Savills, said: ‘As a business we will continue to be directed by Government advice and guidelines, but it’s clear that physical viewings is what we would most like to see a swift return to as soon as it’s safe to do so.
‘Until then, we will continue to offer virtual viewings, which we are having successes with, and offering potential vendor advice via virtual valuations.’
Is it time to widen our property searches?
Virtual tours will be extremely helpful for those looking to change location entirely and not have to travel several hours every time they want to view a property for the first time.
And there are already signs of a greater appetite to move out of cities and into the sticks, particularly with working from home looking like a much more workable option.
As a result, estate agents are suggesting that buyers are widening their search as they reassess their options amid the lockdown.
Mr Perratt said: ‘We have seen two main trends since lockdown. First, an appetite for buyers to move to the countryside with the realisation that working from home is much more possible than they might have previously thought and as a result there has been a spike in demand for country properties of all shapes and sizes.
‘Second, for city-dwellers there is a ‘walk to work premium’ where buyers are seeking to avoid the use of public transport as much as possible which has led a reassessment of their ability to work from home, perhaps not needing to be in the office five days a week.
‘As lockdown eases, whenever that might be, it is likely we will continue to see more information hosted online and virtual viewings continuing to be popular, particularly for international buyers who might prefer a virtual viewing before committing to travelling.’
The boxes that a property needs to tick are forecast to change, whether it is in an urban, suburban or rural area.
Mr Pryor said: ‘What people want from a home is likely to have significantly changed for many with outside space now an ‘essential’ rather than a ‘desirable’ requirement.’
Despite the obvious impact on the housing market of ONS figures showing that six million British workers have been furloughed, some buyers might choose to try to move sooner rather than later, in case lockdown happens again.
And Ben Johnston, of property app Houso, said: ‘Even once lockdown ends, it will take a long time to get back to ‘normal’.
‘Those living in cities in small properties with limited outside space, who are efficiently working from home, may decide to filter out to more rural communities.
‘We could see a shift in people doing this sooner rather than later so if there is a second lockdown in the winter, they will be much better placed to cope.’
Will house prices fall?
House prices ‘unexpectedly’ increased in April despite the coronavirus lockdown, figures from Nationwide revealed, but it cautioned that is based on largely pre-lockdown data.
The average cost of a home across the country rose by 0.7 per cent over the month, and was up 3.7 per cent annually, according to the Nationwide house price index. At a record high of £222,915, the average house price is more than £3,330 above its level a year ago.
House prices ticked up in April, Nationwide’s index showed, but it cautioned that thios reflected mortgages applied for before lockdown
But the building society’s chief economist warned the outlook for the market remains ‘highly uncertain’, and the figures need to be treated with caution, as they are based on mortgage approval data that’s largely for applications made before lockdown.
The figures came a day after Britain’s biggest mortgage lender Lloyds revealed that it expected house prices to fall 5 per cent this year – and modelled a worst case scenario of a 10 per cent drop in its results.
House prices were expensive compared to wages before the crisis and with 6.3million people furloughed and 2 million claiming unemployment benefits, while others take pay cuts or reduced hours money will be tight.
Others tip similar falls, with Knight Frank suggesting 5 per cent, Savills 5 to 10 per cent, and Cebr 13 per cent declines.
House prices were expensive compared to wages before the crisis
The property industry sees surveys as the key
Sellers waiting for spring to put their home on the market and buyers anticipating viewing the traditional rush of properties listed have been dealt a blow this year.
But within the property industry, it’s not instructions and viewings that are seen as the key to getting Britain moving home, it is surveyors’ mortgage valuations.
At the heart of the issue is getting surveyors operational again. This is because they are responsible for valuing a property, something that forms the basis of mortgage offers.
Some property valuations can be done remotely, known as desktop or automated valuations, using local property market data and recent sold prices. But this is not always possible and mortgage lenders don’t like it on higher loan-to-value lending.
In these instances, they want a proper physical valuation done and that’s why getting surveyors back into homes will unlock the property market.
Rob Stevens, of Nationwide Building Society, said: ‘Since lockdown it has been harder to value homes, and while we have been able to use automated and desktop valuations, having a physical valuation is sometimes essential for more complex and unique properties.
‘More generally, we would encourage anyone looking to sell their home to make sure their legal paperwork and property information is up-to-date and in order for as and when lock down eases off.’
Of course, there will need to be new guidelines to take into account social distancing and these are expected to be announced imminently. They are expected to cover not only surveyors and valuers, but estate agents and removal firms as well.
The precise advice, expected to be issued by the Ministry of Housing, Communities and Local Government, will cover how to safely conduct property viewings.
These may include any viewings not lasting more than 15 minutes, and personal protective equipment having to be worn. Sellers may also need to have PPE and to have disinfected the property prior to viewing, particularly door handles.
Only two adults may be allowed per viewing, and viewings will need to be staggered. That means the days of ‘open houses’ are over.
Mark Hayward, of NAEA Propertymark, told MailOnline Property: ‘There is a desire and appetite to get the property market moving again.
‘There is an input to the economy, not only from the property market but the sectors that evolve around it.’
Banks and building societies slashed their mortgage ranges as the coronavirus crisis hit, this Bank of England chart shows
Will banks be keen to lend mortgages?
Experts warn that the easing of the lockdown needs to be carried out ‘slowly and creatively’ so that the property market can adapt accordingly.
A key role is played by banks and building societies and how keen they are to lend mortgages. They will undoubtely be more cautious after lockdown, but experts say that they were in a good financial position before the crisis and eager to lend.
Jonathan Harris, of mortgage broker Harwell Finance Group, said: ‘Ideally, lockdown would be eased cautiously but creatively.
‘It may be tempting to take too much of a risk to get the economy back on its feet but it could make a bad situation even worse.’
While he went on to suggest that the easing of the lockdown would be difficult for the housing market, he added a positive note, saying: ‘We should remember that this situation is not due to economic negligence.’
He explained: ‘The banks are well-funded with plenty of money to lend – any difficulties in getting mortgages have been down to logistical problems, which everyone is encountering, with furloughed staff, call centres having to do social distancing and valuers not being able to value.’
Mr Harris said that one of the ways to restore the property market is to introduce better technology.
In particular, he said there is a need for more desktop valuations, more remote viewing of properties and a more nimble way of transacting.
‘Buying a house has always been a time-consuming and clunky process,’ he said. ‘This experience may help it become more nimble and streamlined so there could be some long-term benefits.’
At the end of April, Zoopla said that demand for homes collapsed in lockdown and even though it’s picked up a little it remains 60% below the levels at the beginning of March
Do we need a stamp duty cut?
The supply of homes is likely to be low as we emerge out of lockdown, and estate agents are calling on the Government to introduce measures that will encourage people to move home.
These include a stamp duty cut or holiday to help stimulate the market.
Charlie Bryant, of property website Zoopla, said: ‘We would like the Government to implement a stamp duty holiday for six to 12 months once lockdown has eased.
‘Stamp duty has been among the greatest blockers for the mid to upper echelons of the market for more than four years.
‘If the market is going to get moving, consumers need to be offered a meaningful incentive. A stamp duty holiday is just that.’
He also agreed that new technologies can make buying a home easier and quicker.
‘In Britain, completion takes on average 14 weeks. In some Scandinavian countries, it can be done in around a week,’ he said.
‘One initiative the government was looking at was Buyer and Seller Information Packs (BASPI).
‘These might get this completion down to eight weeks and, at the same time, reduce the number of transactions – currently between a quarter and a third – that fail.’
In essence, a combination of measures can help breathe life back into the property market amid the easing of the lockdown.
They range from getting surveyors back out on the road to assess properties, to encouraging more virtual views and introducing financial incentives, such as stamp duty holidays, to encourage people to move home.