London house prices stalled by coronavirus: Rightmove halts monthly report for first time ever as so few homes put up for sale
The property bounce that started at the beginning of the year has been well and truly punctured by the coronavirus.
“Given the lockdown and pausing of key activities in the housing market, statistics on the number of properties coming to market, new seller asking prices, and new sales agreed are not meaningful,” explains Miles Shipside, Rightmove director and housing market analyst. “You do not have a functioning market when buyers can’t buy and sellers can’t sell.”
A small sliver of positive news is that people already committed to moving have not abandoned their plans altogether.
Sales still going ahead
Rightmove found that the total available number of homes for sale has fallen only 2.6 per cent since lockdown.
And most deals which were already under way when the pandemic crisis began are continuing, says James Clarke, head of London sales at estate agent Knight Frank.
He estimates that 80 per cent of pre-lockdown deals remain on track. “Some sales are falling through, but you’d expect that in a normal market,” he adds.
Contracts are being rewritten with “Covid-19” clauses allowing completion dates to slip without penalty if they need to self-isolate, or disruption to Land Registry searches or removal services, causes delays.
Inevitably, some buyers are asking for price cuts to cover them against potential price falls when lockdown lifts.
“One buyer asked for a reduction to cover their rent between now and whenever the completion date will be,” says James Gubbins from Knight Frank’s Mayfair office.
“We worked out the buyers’ daily rent and suggested that instead of the reduction the vendor would cover their rent, showing they were prepared to do everything they could to get the deal completed as soon as possible.”
Are people still buying homes?
New deals, however, have “fallen off a cliff” since Britain went into coronavirus lockdown on March 23.
The latest UK residential survey from the Royal Institution of Chartered Surveyors found three quarters of the organisation’s members saw a decline in business in March, despite an increasing focus on offering buyers video tours of homes for sale.
Jeremy Leaf, principal of Jeremy Leaf & Co estate agents, says: “Demand to buy has been falling off a cliff, not least because physical viewings and surveys cannot be arranged despite the growth in virtual tours.”
How might the Government help the property market?
Whether prices will fall once London comes out of lockdown – and by how much and for how long – will depend on wider economic factors, in particular the scale of job losses. But Rightmove’s Miles Shipside says support from banks and the Government in the coming months will be crucial.
He says interest rates must be held down, while banks must be prevented from repossessing homes of people who fall into arrears, in order to avoid a “fire sale”.
Shipside also backs calls from the Royal Institution of Chartered Surveyors and the National Federation of Builders for the Government to introduce a stamp duty holiday once the crisis has passed, in a bid to entice nervous home buyers back to the market.
The Government is already in talks with housebuilders about the possibility of continuing Help to Buy for a further year beyond its April 2021 expiry date. The Government’s equity loan scheme cuts first-time buyer deposit requirements for new homes to five per cent.