Easing lockdown: what this means for UK property
With the government releasing Our plan to rebuild: The UK Government’s COVID-19 recovery strategy earlier this week, we are starting to see ways in which the country will begin returning to a sense of normality.
Top of the list is social interactions, with people wanting to see loved ones. Also on that list is the country's economy and in particular, the property market.
The government has set out plans to restart England's housing market. Estate agents can now open, viewings can be carried out, and removal firms and conveyancers can continue operations. Lenders and brokers believe that landlords should be poised to expand their portfolios – especially in London and the Home Counties. Knight Frank have revised their forecast saying house prices would fall seven per cent compared to last year. Whilst easing of certain restrictions has resulted in a spike of activity on the first day, the revised report said much of the decline in prices had already taken place between March and May. The drop is a result of several factors, but what is coming to light is that (naturally) Buyers believe they are in a position to offer less and Sellers believe they are in a position where they need to accept less. For example, in March houses were sold for 98 per cent of their asking price on average. Whereas since March, Sellers are now accepting offers for 94 per cent of the asking price on average. Showing an immediate drop of four per cent in sold prices since March.
Surveys and valuations
While plans have been announced and guidelines put in place to help restart the property marketing, in-person valuations are still restricted unless deemed necessary. In its place surveyors and valuers are turning to more remote methods of surveying and valuing. Desktop surveys and valuations have existed for some time and are now the go-to method in a time of crisis. Paragon, a buy-to-let lender, for example, has introduced desktop valuations for properties that are either single self-contained units or that have up to four tenants.
With most development sites back in operation across the country, after having been working at reduced capacity or closed, availability of inventory can become slightly more predictable again. We are already seeing the development finance market pick up again with Paragon Bank providing an £18m funding package to enable a developer to complete the remainder of their project. We have also just seen Investec Structured Property Finance lend £11.2m over 24 months to fund the development of nine industrial units. Developers are starting to re-open sales offices and show homes across the country, with strict guidelines still in place, showing that appetite for buyers will start increasing once more.
With office-based employers and employees not knowing when they will be returning to the office, appetite for newer space may remain low. However, with fewer employees on-site some businesses may look at down-sizing their existing property portfolio in favour of smaller, but more carefully designed spaces. We anticipate businesses looking to either downsize and create smaller hub offices or potentially look to repurpose the space they already have. Over the coming months (years?), businesses will still need to take into social distancing measures and look at what their building currently offers employees. Some businesses have already begun installing and expanding bike parks, anticipating the rise of employees favouring that commute over public transport. Businesses are also looking at ways of expanding facilities on-site, for example, more showers to eliminate people queueing/congregating unnecessarily.