Real estate consultant Knight Frank said the 38% drop in home sales in 2020 would have a ripple effect in the real estate sector, affecting retailers, moving companies and even government coffers.
Assuming that the physical distancing rules remain in place throughout May but are gradually lifted in June, the downturn in the housing market will translate into 350,000 fewer mortgage approvals in England and Wales, including 150,000 fewer mortgages for first time buyers, added Knight Frank.
Homeowners are also expected to spend £ 7.9 billion less on DIY and renovations this year, while removal companies will lose around £ 395 million. Meanwhile, the Treasury is expected to lose around £ 1.6 billion in VAT, in addition to significant losses in personal and corporate tax revenue.
While the Treasury is also expected to waive around £ 4.4 billion in stamp duties, Knight Frank calls for a suspension of stamp duties as part of efforts to revive the real estate industry after the foreclosure measures are lifted . The real estate council said the measures should also include extending the purchase assistance program and relaxing planning rules.
Tom Bill, head of London residential research at Knight Frank, said: “The move has a clear multiplier effect on the economy. Businesses of different sizes in all areas of the economy are experiencing these benefits, which the government will take into account when developing its stimulus package after the foreclosure. “
Rightmove real estate website said it had already seen a 40% drop in the number of homes listed since March 26, when the government effectively froze the housing market by telling buyers and sellers to delay move if possible and stop visits until restrictions are lifted. .
Rightmove figures suggest that although potential sellers are still allowed to deal with real estate agents, many have put plans on hold. The website, which covers approximately 95% of the market, indicates that there were 65,531 new registrations between March 8 and April 11, a period that spans the date on which the lock became effective.
However, between March 10 and April 6, 2019, 112,570 homes for sale were added to the website. Rightmove said it marked a “sharp turnaround from the best start to a year since 2016”, and that before the lockout, sales had increased 11% from last year’s figures.
London-based real estate agency Foxtons said on Friday it had put 750 workers on leave as part of measures to protect the company from collapse. It said it had modeled “a reasonable worst-case lockdown restriction period in London until the end of August 2020.”, which translates to 78% lower sales than the same period last year.
But sellers do not appear to have removed homes from the market in large numbers, with available inventory down only 2.6%. Rightmove also said that the average asking price for new homes entering the market had only fallen by 0.2% to £ 311,950, but warned that the comparisons were not “meaningful” in the current situation.
Miles Shipside, Director of Rightmove, said: “We think it will take several months or more for the market to find its mark in this new unstable world.
“During this idle period, we do not expect significant price cuts, as home sellers will not be prepared to lower their prices when it is not yet clear how the general public, businesses, financial markets and government will manage the transition to what turns out to be the new standard. “
Real estate agents have moved on to online tours, with some sellers offering their own tours of their properties. Ben Hudson, general manager of Hudson Moody’s York real estate agents, said his business has adjusted its operations.
“Before the period of stay at home, we edited videos on many of our properties and invited our clients to produce their own” virtual views “which had a very positive and enthusiastic response,” he said. .
“The vast majority of current sales want to take place as soon as possible after the foreclosure.”
Housing market commentator Henry Pryor said that “it is worth remembering that there is no direct cost to put your property on the market and that real estate agents will always want to list the houses even if people can’t see them. “
But while half of the homes listed generally find a buyer, Pryor said the ban on physical visits and the lack of surveying mean that “this month, there could be less than 1% sold.”