It looks as if the London property market is going to experience a fall in activity, which will not come as a surprise to most. Much like the rest of the UK, with the lockdown to combat the further spread of COVID-19, the housing market has decreased in activity.
With a drop in reported home viewings and new listings all but drying up, the property market looks set to go the same way as the stock market. With current advice by the Government to practice social distancing, unemployment becoming an increasing reality for many and a partial lockdown in place from last Sunday, there is unlikely to be a positive change soon.
Before the shift in response to the virus, the London property market was at its strongest point that we have seen for the past four years, before the referendum. With asking prices increasing, we must ask whether this may return with the restrictions lifted in the future.
A stifled market recovery
Sales that were near closing went ahead the week prior to the partial lockdown, but the industry had already experienced a dampening in the market. Buyers and sellers became far more cautious and are now waiting on the difficult period to pass before making more investments.
The full outcome of the damaging effects of COVID-19 on the property market is yet to be realised, but much like the uncertainty surrounding Brexit, only the very motivated sellers and buyers are thinking of continuing in this unknown environment, whether it pays off is yet to be seen.
Buyers might not have much of a choice here though. Agents across London have commented that viewings have essentially dried up over the last few weeks, with viewings down by over 50%. Big ticket transactions from overseas investors have even fallen through, with prospective buyers cancelling trips or simply backing out of sales due to the uncertainty.
This could also be due to the collapse of the stock markets worldwide. With many investors looking to diversify their portfolio with property, with many on paper taking a huge hit, now may not be the time for these buyers to make the move.
Is London still a profitable location?
Some reassuring news is, unlike other markets, property is generally viewed as a ‘haven’ by investors. International investors over the past few weeks have reportedly been placing ‘blind bids’ to secure property, with often nothing more than a video tour of the property.
Whilst activity has slowed quite considerably, sales are continuing to drip through, perhaps more than was anticipated due to the falling house prices. It appears stocks and shares have taken a far bigger hit so far, this having a greater impact for investors.
A shining light in the property market, something that could well keep the market afloat if the pandemic is to isolate us for a significant period is the use of video viewings.
A future tool for home sellers
The number of virtual viewings in recent weeks has risen considerably, something that looks set to continue even after the COVID-19 pandemic eases.
The challenge the property market is facing is unprecedented. We need to adapt and pave the way for how the future of the industry will look. For overseas buyers (and sellers), this could prove to be a fantastic test for how the market will operate in the future. If this is a success, we may see many more investments made from overseas buyers without coming to view the property in person.
Whilst there is still likely to be a dominating face-to-face approach to selling a house going forwards, we should see sellers become more open to this virtual approach to selling. Certainly, going forwards, we are likely to see the continued rise in virtual viewings, with many deals likely to complete once the isolation period eases across the UK.