Housing Market Will Remain Active During Second Lockdown
In what’s being heralded as a victory for both common sense and the economy as a whole, housing minister Robert Jenrick has confirmed that the UK’s housing market will remain active during the second lockdown.
The government recently outlined new restrictions with an initial end date of December 2, though the second lockdown is not expected to have nearly as devastating an impact on the housing market as the first.
In addition to confirming that the market will remain open, Mr Jenrick also indicated that further details will be published by the FCA on new mortgage payment holidays for existing borrowers. He was also adamant in pointing out that those looking to relocate or purchase their first homes over the next four weeks will have every opportunity to do so.
“The housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance,” he said.
“Tradespeople like [sic] electricians, plumbers, repairers of domestic appliances can enter your home. They will need to follow social distancing guidance that has already been published,” he added, while confirming hardware shops will be authorized to continue doing business.
A Question of Demand
Though the decision to keep the housing market open during the second lockdown has been welcomed across the industry, some have questioned whether demand will be sufficient to sustain its performance.
Mortgage consultant Chris Sykes expressed concern over the likelihood of prospective buyers purchasing properties during lockdown, along with the extent to which the new restrictions could make it even more difficult to qualify for a mortgage.
“The question remains how many people are going to be out and about viewing property given the circumstances?” he said.
“Ultimately, this is likely to entrench the current trends for those looking to move to houses with more space, both outdoors and to work remotely, and means areas outside major cities are likely to see higher demand than pre-COVID,”
“A second lockdown and the corresponding economic repercussions are exactly why mortgage lenders have been being cautious of late,”
“We expect to see further restrictions on borrowing certainly for those with deposits smaller than 20 per cent, with these products almost certainly becoming even harder to find, and those that are available will charging even higher rates to account for the risk.”
A Less Severe Slowdown
While the second lockdown will inevitably have an impact on the housing market, most experts believe it will not be nearly as severe as the previous total shutdown.
“Thankfully, this second lockdown is unlikely to be as devastating as the first,” said Melanie Spencer of MCI Mortgage Club.
“But there will be shrinkage of customers who work in affected sectors such as leisure, retail and hospitality as lenders will naturally adjust their risk appetites, therefore, for those fortunate not to be overly affected, they will still have the opportunity to take advantage of the stamp duty holiday, but it will create further divides between the haves and have-nots,”
“Finally, given the unknown quantities of the EU / UK trade agreement and the potential impact to the UK consumer in 2021 on affordability as duty on imported goods is likely to rise, we might just see the final push for property before we dive into even further uncertainty.”