As the country - and the world - came to a halt in an attempt to curb the spread of the virus, so did the property market. Construction on residential and commercial developments was paused, estate agents were unable to conduct in-person viewings, and house-buyers and renters had to put their house moves on hold.
But as restrictions began to ease on May 13, the housing market in particular evidenced incredible pent up demand and a promising level of resilience.
A report from the Office for National Statistics (ONS) found that in April 2020, 11 of the 14 service sectors experienced their largest falls in growth since records began in January 1997, but real estate activities was not one of them.
Other than public administration and defence - which saw no decline - real estate services saw the lowest fall at -2.4%.
All but one of the 14 service sectors declined in April 2020. Index of Services, main sectors, month-on-month growth, seasonally adjusted, UK, April 2020.
Source: Office for National Statistics - Index of Services.
Zoopla’s UK Cities House Price Index Report also found that, in the week after the housing market was able to reopen, housing demand had jumped by 88%. Further to this, on May 27, the UK’s number one property portal, Rightmove, had their busiest day on record, with over six million site visits.
On a regional level, Homes by Carlton (MAVEN Bonds’ Strategic Delivery Partner) have received around 1000 enquiries through property agent Urban Base (Homes by Carlton’s New Homes Sales Partner) since the day the market reopened. This has led to a number of early-bird reservations across their North East-based new homes developments at Middleton Waters, Thorpe Paddocks and The Langtons.
Demand for housing with gardens and close to local amenities expected to grow
The long-term effects of COVID-19 on the housing market are, at present, unknown. The current pandemic - and its economic implications - are unlike anything we have experienced before.
One thing that is expected, however, is that lockdown will prompt a jump in demand for homes with gardens, and those located in areas close to local amenities.
As unessential travel was restricted - and driving to beauty spots for walking, exercising or sunbathing was forbidden - many took solace in their gardens. Those close to local supermarkets and convenience stores were also able to easily pick-up essential items.
However, those living in flats or apartments - where they may be lacking in amenity space - or those without local stores on-hand may have found themselves reassessing their living situations, and in the market for a move.
On top of this, with many companies expected to review their home-working policies as an after-effect of COVID-19, some homeowners may have more flexibility to move further from their workplaces, while others may be searching for a home with an extra bedroom to turn into an office space.
Coronavirus-related restrictions will not be in place forever - in fact, they’re already being eased to a large extent - but the experiences of the past several months are likely to cause many to reevaluate their priorities when looking for a new home.
This is where well-placed, community-centric housing developments such as Homes by Carlton’s Cathedral Gates scheme are important.
Based in County Durham, Cathedral Gates is a development comprising 14 bespoke three and four-bed homes, situated in a thriving area that overlooks the beautiful countryside, and is surrounded by local amenities. This makes it the perfect spot for families and young professionals alike.
Why is housing demand expected to continue?
The introduction of the government’s Help to Buy scheme in 2013 was an important factor in rising demand among first-time buyers in particular - as the number of first-time buyers hit a 12-year high in 2019. Though the scheme is due to end in 2021, there have been calls for an extension, or a scheme to take its place.
The government has proposed a new scheme, which would see first-time buyers and key workers given a 30% discount on new-build homes. This would, expectedly, continue to drive demand, particularly among those taking their first steps to get on the housing ladder.
From a housing development perspective, the pause in building only means that construction will need to be ramped up - as the demand for new homes continues to rise, while the UK faces an ongoing, chronic housing shortage.
With a government-set target of 300,000 newly built homes per year continuously failing to be met - as only 178,900 new homes were delivered in the year ending December 2019 - residential development is crucial, particularly from regional, SME house builders.
Non-bank lending and alternative finance - such as that made available by the MAVEN Bonds IFISA - mean that SME house builders can continue to deliver high-quality, innovative homes. This has been necessary since the 2008 financial crisis, after which traditional funding methods were no longer enough to support regional, SME house builders in driving much-need housing development.
As the market strives to recover, it’s unclear whether rentals or sales will pick-up first.
For house sales, confidence in the economy - and its ability to bounce-back from the effects of COVID-19 - and the availability of mortgage products are key to recovery.
It’s important to remember, though, that in the event of uncertainty in the sales market, there is usually a corresponding rise in those looking for rented housing.
Forward thinking, agile house builders have the ability to be flexible in order to meet the needs of an adjusting tenure mix - whereby the likes of private sale, shared ownership, private rent and rent-to-buy options are on the table, and assessing market need is critical.
Though the current downturn is distinctly different from that of the 2008 crash, parallels can be made in regards to the housing market. This includes the importance of the availability of a variety of tenures, and - hopefully - the market’s ability to bounce-back better than ever.
The MAVEN Bonds product is available exclusively to experienced investors who are classified as either sophisticated investors, high-net-worth individuals or professional investors and have the knowledge and experience to make their own investment decisions. Investments are high risk and illiquid, your capital is at risk and returns are not guaranteed. Bonds are not protected by the Financial Services Compensation Scheme (FSCS).