New instructions down 72% and some purchasers ‘buying blind’ – LonRes

A small proportion of purchasers in prime central London (PCL) have still been ‘buying blind’ or through virtual tours during lockdown, estate agency platform LonRes claims.

The property data provider, which tracks the prime London sales and lettings market, said the number of exchanges between the beginning of the lockdown period in March and the end of April have fallen to around 35% of the levels seen a year before.

However, deals are still happening.

Marcus Dixon, head of research at LonRes, said: “Current restrictions mean that agents, prospective buyers and tenants are unable to physically access properties they would like to list, purchase or let.

“But deals are still happening.

“Some purchasers are buying blind, others are offering on properties they viewed before government restrictions were tightened, or on the basis of virtual tours.

“All that said, we should be under no illusion, these deals represent a small proportion of those we would usually expect at this time of year.

“The reality is that until restrictions are lifted the property market, with a few exceptions, will be on hold.”

Lonres said the number of new instructions in prime London areas was down 72% between mid-March and the end of April compared with volumes a year ago but there have actually been 70% fewer withdrawals compared with the same point in 2019 and 74% fewer home owners reducing their asking price.

In prime London lettings, the number of new lets agreed has fallen by 67% in the seven weeks from mid-March to the end of April, while new instructions for agents are down 28% annually.

LonRes said this has caused a 20% increase in the number of properties available to let at the start of May, which has led to landlords cutting rents to attract new tenants.

Dixon added that it is too early to assess the full impact of lockdown and the pandemic on the property market, but insisted the situation is different to the 2008 financial crisis as jobs have been preserved and interest rates are lower.

He said there was hope that the PCL area could lead an eventual recovery due to the higher proportion of cash rather than mortgaged buyers, high levels of buyer and tenant demand and because property may be seen as a safe asset during volatile times.

Dixon said: “There will unfortunately be financial casualties of the pandemic which may force some homeowners into listing their properties for sale.

“But the majority of those owning homes in central London have a more significant equity buffer than in 2008 and holding costs, mainly servicing mortgage debt, are lower too.

“We expect that rather than sell, unless they must, many home owners will revert to the frame of mind they were in a year ago, namely sit back, wait and hold off from transacting.

“This suggests we will see little activity in the short-term but will, we hope, mean that once conditions improve, we’ll start to see a return to the positive market which had begun to emerge in the six months prior to social distancing measures being introduced.

“Once restrictions are lifted there will obviously be significant challenges for our industry and the wider economy. But for now, we’ll look at a few reasons to be optimistic.”

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