COVID-19 has had a detrimental effect on a number of UK sectors and the housing market is no different.
Zoopla’s research department has released data that highlights how lockdown and social distancing measures have negatively affected the industry:
- New sales have dropped by 15%
- Over the next 3 months there will be a 60% drop in transactions
- Fall throughs have been 60% higher
- Newly agreed sales down by up to 80% on the same month last year
- Interest from new buyers has fallen dramatically
Factors affecting the housing market
These figures aren’t particularly surprising as throughout March the UK housing market effectively ground to a halt, with many lenders withdrawing their products from the market in response to COVID-19. Around 1,500 fewer mortgage products were available to potential buyers and investors.
Lenders also imposed stricter rules with many only lending on typically safe properties where borrowers had a large deposit or high level of equity.
The need for social distancing has meant valuations and viewings have stopped which has made selling and buying properties that much more difficult.
Estate agents are still continuing to list properties, but at a slower rate which reflects a fall in demand and a fall in interest from new buyers.
The long lead times within the property market, with some deals taking from three to six months to complete, means it could be a while before estate agents and the market as a whole can recover. The effectiveness of Government action to support jobs and the wider economy, and whether this curtails an increase in unemployment will also be a major factor.
Richard Donnell, director of research and insight at Zoopla, said: “We do not expect any immediate impact on prices. Beyond this, the outlook for house prices largely depends upon how the government’s major package of support for business and households reduces the scale of the economic impact. Low mortgage rates mean forbearance will remain the preferred choice for lenders, but further Government support in these unique times cannot be ruled out.
“The timing of any rebound in housing market activity depends upon when new restrictions are lifted, and the extent to which households and businesses are able to return to a normal way of life. Browsing for homes online is set to continue and, while demand for property may rebound quickly, it will take several months for agents to rebuild new business pipelines.”
Insolvency in the estate agent sector
Even before the coronavirus pandemic hit the UK, smaller high street estate agents were facing problems such as tighter margins and increased competition, especially from online agents. Now, due to COVID-19, many more are suffering.
Statistics over the last few years have painted a problematic picture. According to an analysis of data from one accountancy firm, nearly a 5th of UK estate agents is facing financial problems, with 19% showing warning signs of insolvency.
If you are a director of an estate agent that is facing financial difficulties, Clarke Bell can help you.
As Licensed Insolvency Practitioners, we can provide you with tailored, free advice to help you find the most suitable solution. That may be a Creditors’ Voluntary Liquidation (CVL) or another option.
We have helped other estate agents, so we will be able to help you and your company deal with your cashflow problems.
Get in touch with us now, for your free and confidential advice.
0161 907 4044 / [email protected]