The year 2020 will go down as one of the most memorable in history across the entire world. The covid-19 epidemic has exerted unforeseen circumstances internationally, with some countries practically shutting down in an effort to contain the virus. Just about every area of commerce and history has been hard hit in the UK. Travel and tourism businesses ground to an enforced halt as did all non-essential retail. Schools and universities took extended holidays, pubs were shut, and roads become eerily quiet.
Lockdown was introduced into the UK in March, with the intention of limiting unnecessary contact with persons from other households. For many people, such a drastic limitation of their usual routine was hard to handle, but it was necessary to stem the rapid spread of the virus. At the time of writing – the latter part of August 2020 – lockdown has been withdrawn yet restrictions on social distancing remain in place. For UK citizens, a face mask must be worn in shops and on public transport, and this is likely to remain in place for a long time.
The construction industry also suffered, with many projects put on hold and work stopped. Property developers found themselves with no real way to operate, and many planned house builds – and sales – were badly affected. How was the property development industry worst affected? Let’s have a look at what happened during lockdown, and then we’ll see what is happening now.
Property Market During UK Lockdown
It’s fair to say that people began to worry about the coronavirus crisis when news of rising numbers of cases began to filter through not just from China but from the likes of Italy and Germany. Clearly, this was a virus that we had little to no knowledge of, and was spreading very quickly. When the UK government took the drastic decision to enforce lockdown – social distancing measures having been advised and recommended up to that point – it meant people being unable to work. Not just some people, but all but a few of the working population in the UK.
Why was property development badly hit? First, lockdown prevented any non-essential work from being carried out in order that people would refrain from travelling to and from their place of work. Second, individuals were forbidden from meeting with persons other than those within their household. The possibility of showing someone around a housing development – or indeed a house for sale – was gone in an instant. House sales stood still, deals that were on were put on hold, and developments could not continue.
Two factors exaggerated this: there was no timescale put on lockdown, and for the most part the weather during lockdown in the UK was fair and dry – perfect, in fact, for building and construction work. Projects that could have been completed in this period stood waiting, and nothing could be done.
Some enterprising developers enhanced and extended the practice of offering a virtual walk-through of the development. Using broadband internet potential interested parties could view the development through a full 3D effect rendering from the comfort of their home. However, the problem remained that they were not going to buy on the back of a computer rendition, and many had been furloughed by their employers and found themselves on a reduced income for an indeterminate time.
Now that lockdown has been lifted and there are fewer restrictions on movements of individuals the property development market has begun to lift, but to what extent?
Where the Property Development Market is Now
With restrictions eased and encouragement from the government to get the country working again, many property developers resumed work on projects, yet there are still hurdles that are difficult to overcome. The social distancing rules are still in place in retail environments and in many other places, and as far as selling houses goes one can arrange a viewing, but the viewer must make their own way there and the property needs a thorough clean after every viewing. Open house viewings are still not permitted.
Such problems are restricting the resuming of the property market as a whole, and for developers the prospect of houses standing unsold is one that may have an extended future. For a large proportion of the working population – who of course are the house buying population – the future of their jobs remains uncertain. Talk of a ‘second wave’ and an additional lockdown period mean nobody is clear as to when things will return to as close to normal as we are going to get.
As for house buyers, it’s no surprise that in a time of financial uncertainty and low job security they are reviewing their options. For many, now is not the time to move to a new house. One curious blip in all of this has been a rise – quite a considerable one – in the numbers of people searching for properties online. One school of thought is that the enforced lockdown has made them realise they need a larger indoor or outdoor space than they previously believed.
What does the future hold? That depends upon a number of unknowns.
Property Development Post-covid 19
The problem we have – and not just in the property industry – is that the future is uncertain. Nobody can predict the immediate path the virus will take, and everyone knows that what happens in the next few weeks and months will determine whether or not we need to implement another lockdown or we can take further steps back to normality. For property developers, the situation remains unstable as while they can build and develop properties, buyers are harder to come by in the present climate and that is not about to change.
As a whole, the property industry is picking up albeit at a relaxed and cautious pace. House prices are a little lower than before the pandemic, which is to be expected, but have not crashed through the floor as many predicted. We can only do as we are instructed by government advice and get the industry back up and running as best we can.