As the second national lockdown ended just after midnight on 2nd December, England entered an updated three-tier system. What does this mean for the property market?
The four-week national lockdown has come to an end. This second lockdown was different than the first one back in March, which resulted in a temporary halt to much housing market activity. Building sites closed, and the industry as a whole ceased operations for a time.
The government made it clear that this time around the housing market must remain open. Buying and selling continued at strong levels. The market even usually starts to face a seasonal slowdown this time of year. However, demand has continued at record levels. And house prices have also been on the rise.
How will the property market operate?
Areas of England are now on a tougher version of the three-tier system of restrictions. Approximately 99% of England are in the more stringent tiers two and three. However, the property market will remain open for business in all three tiers.
Property viewings with social distancing measures in place may continue. However, many in the industry recommend using a virtual-first approach. Professionals in the property industry, such as conveyancers, estate and letting agents, tradespeople and removal firms, are also allowed to operate.
Some things are likely to take longer with necessary working practices and COVID-19 restrictions in place. The government is calling for flexibility among buyers, sellers and homemovers.
Additionally, bailiffs will not be enforcing tenant evictions until at least 11th January. Six-month notice periods will be in place until at least 31st March. However, there are exceptions to this where tenants have demonstrated anti-social behaviour or are in substantial rent arrears.
How did the housing sector perform during lockdown?
The second lockdown began on 5th November. As the housing market remained open, buying, selling and homemoving continued at record levels. With unprecedented demand, house prices rose over the course of the month too.
In Nationwide’s House Price Index, annual house price growth increased from 5.8% in October to 6.5% in November. This is the highest rate of growth since June 2015. Prices are also up 0.9% month-on-month after taking seasonal factors into account.
Robert Gardner, Nationwide’s Chief Economist, says: “Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.”
Data from London estate agency Chestertons revealed there was an increase in market activity during November compared to last year. Buyer enquiries were up 24% year-on-year. Exchanges were also up by 13%. Additionally, the number of newly marketed properties and properties for sale increased by 63% and 53%, respectively.
Nick Barnes, head of research at Chestertons, comments: “Despite Covid-19 continuing to disrupt day-to-day life, buyer interest remains remarkably strong. Our sales offices have witnessed a clear increase in activity compared to November last year. Whilst the Stamp Duty holiday has certainly played its part, buyers have further been motivated by the government’s decision to keep the housing market open during the second national lockdown.”
What will happen now?
Despite the three-tier system in place, the housing market is likely to continue moving at pace. Transaction levels are currently booming. Many in the property industry feel this will continue even through the typically slower winter months.
The stamp duty holiday is currently in place until 31st March. This is driving buyer demand. With buyers and sellers rushing to beat the deadline, the property market is set to have its busiest holiday season for over a decade, according to Zoopla.
On top of the tax holiday, many have found spending so much time at home has changed their priorities. And many have predicted the second lockdown will have further secured people’s desire to move. This will also likely keep the property market moving in the coming months.
Richard Donnell, Zoopla’s head of research and insight, states: “We’ve already seen how the first lockdown led to people carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles, with a focus on prioritising space. And the latest restrictions will continue to support this trend – particularly for those who are more financially secure.”
If you’re looking to buy, sell or move house, find out how your local property market is operating under the new three-tier system.
