Reaction: housing market reopens - but what will happen to prices?

England’s estate agents are back in business as the government gives the go-ahead for the housing market to restart following seven weeks of lockdown.

Under new regulations, would-be buyers are permitted to view properties, and removal firms and conveyancers can return to work, provided social distancing rules are followed.

Announcing the changes, Housing Secretary Robert Jenrick said that “this critical industry can now safely move forward”, adding: “Our clear plan will enable people to move home safely, covering each aspect of the sales and letting process, from viewings to removals.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The moving plans of an estimated 450,000 buyers and renters have been on hold since the UK lockdown - which “included a freeze on most property transactions” - was imposed on 23 March, says The Times.

The plan “marks a victory” for Jenrick, who claims it will “deliver a significant fillip to the economy at little risk of spreading infection”, adds the newspaper.

Mark Hayward, chief executive of trade body NAEA Propertymark, said: “There’s been considerable pressure from consumers to view properties and put their own houses on the market.

“We’ve also seen the rogue element of agents ignoring the guidance, so it was paramount that the government got something out so that people knew what to do.”

The measures are being rolled out amid growing warnings about the economic cost of lost sales, and fears of a potential property price crash.

Newly published figures from estate agents Knight Frank show that transaction numbers in the week ending 2 May were 54% below the five-year average.

However, while visits to the Rightmove property website fell by around 40% when the lockdown was announced, traffic was back to just 20% below normal levels at the start of April.

Andrew Perratt, head of country residential at Savills, says the increase in web visits may be down to “bored dreamers”, but adds that “what is most significant for me is the jump in new buyer registrations”, The Guardian reports.

According to City A.M., registrations in the week ending 28 March were down by 77% on the five-year average for London. However, by 2 May the decline had narrowed to 60%, and “the number of new prospective buyers doubled over this period”.

The Telegraph says that as lockdown restrictions are lifted, “all eyes” will now be on house prices, “and these will be closely tied to employment figures”.

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

Chancellor Rishi Sunak this week said that the number of furloughed workers being paid under the government’s Job Retention Scheme now stands at around 7.5 million. Meanwhile, one in seven homeowners have opted to take a three-month mortgage holiday.

“When these schemes end, forced sellers who have no choice but to accept price discounts may start to come to the market, and these sales will drive the price statistics down,” The Telegraph predicts.

However, some experts are more optimistic.

The Times’ deputy property editor Carol Lewis says that “a drastic decline [in property prices] may be averted by the unexpected early opening of the property market”.

Lucian Cook, head of residential research at Savills, adds that the reopening of the housing market will act as an “acid test”.

Earlier this month, Lloyds Banking Group put forward a worst-case scenario in which property prices fall by 10% this year, by 10.9% in 2021 and by 12.9% in 2022. This scenario would see the average price of a home plummet from £223,000 to £156,000.

But Cook has a more upbeat prediction, saying: “I suspect the fall in prices will be nearer 5% now the market is opening earlier than expected. By doing this, the government is reducing the risk of more dramatic price reductions.”