Property market in England re-opens for business, but what will happen next to house prices?

Re-opening the property market was not covered in Monday's original 50-page government document on what will and will not be permissible, but on Tuesday a further update made clear that the property market in England is re-opened.

Housing Secretary Robert Jenrick announced the measures, which include the following:

• Estate agents’ offices can open
• Viewings are permitted
• Show homes can open
• Removal companies and the other essential parts of the sales and letting process are re-started with immediate effect.

The new rules 'will enable people to move home safely, covering each aspect of the sales and letting process, from viewings to removals,' said Mr Jenrick. 'This critical industry can now safely move forward, and those waiting patiently to move can now do so.'

Online activity — including virtual viewings — is strongly advised wherever possible, but in-person viewings and other visits are now allowed once again. This leads to a slightly bizarre situation in which members of the public in England are not permitted to invite neighbours, friends or loved ones into their homes, but are allowed to invite complete strangers to walk through their homes, subject to the 2m social distancing rule.

Alistair Elliot, chairman and senior partner at Knight Frank, told the BBC that people will be ready and willing to move: 'We believe the public will have confidence to re-engage with the housing market.'

With almost half a million house moves believed to have been put on ice since lockdown began in March, there is little doubt that many people will be keen to move.

Others, however, may be keen to wait, given the confusing array of predictions about house prices across the industry, with anything from a flat market to a 30% drop being predicted.

"While there could be some further downward pressure through to the summer it is likely to be limited"

A few weeks ago Knight Frank's global head of research, Liam Bailey, had predicted a 3% drop across the UK and no change in prices in prime London. That view was based on a projection that lockdown would come to an end in late May; with measures to be in place, he now sees things differently.

'It is challenging to get a handle on what is happening to pricing right now,' he admits, adding that prices are already around 5% down from the beginning of the crisis, and that things may not get much worse than that — particularly with very low inventory and low interest rates.

'While there could be some further downward pressure through to the summer it is likely to be limited – and in prime London there is the potential for an uptick in the final two quarters of the year to offset some of the losses in the first half.

'Our revised forecast for pricing during 2020 in the light of the longer lockdown is -7% for the UK and -5% for prime London.'

Others view things differently, not least because we're only just beginning to see the short term impact on the economy and jobs — which shows the biggest fall since 2008 — let alone the medium-to-long term view. 'Definitely renegotiate,' is the advice given by country market buying agent Jess Simpson, who told the Telegraph that buyers who've had an offer accepted should seek a 10-20% discount.

But with very little housing stock out there (Knight Frank report that new listings have fallen 90%), calling a seller's bluff in such a way would need strong nerves. That is especially likely to be true in the country house market, which is widely predicted to withstand the worst of the price drops as people look to move out of cities.

As for actually getting the processes back in place, some agents are bullish about their ability to get things moving again, while still remaining safe.

'With the process of buying or renting now requiring very little face to face contact, agents should be able to adapt swiftly to this new working norm,' says Marc von Grundherr of Benham and Reeves.

'We’ve already stockpiled a large amount of PPE on the advice of our offices in Asia who have been preparing for a return since January and while we can’t speak for all agents, we remain confident that we can service our customers appropriately and with the correct measures in place.'

Not everyone is quite so prepared, however, as London agent Edward Foley mentioned via Twitter:

As for surveys and lending, Miles Robinson of mortgage broker Trussle welcomed the change but urges caution — and the continued use of 'desktop surveys' for lending with a loan-to-value ratio of 75% or less.

That's not always possible, however. 'Some properties require a physical valuation. These include those in flood risk areas, those with previous adverse valuations, and some new build properties,' he says.

'While surveyors can now enter the home, it’s important to stress that visits are still only advised when absolutely essential.'

Credit: Strutt & Parker

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