When lockdown was enforced back in March, it was a worrying time for all business and industry sectors. Not least the property market. For new build homes especially, 2020 had started out a strong year. The last time new homes sales started the year as high, was back in 2016. But, what would the impact of lockdown have on new build home sales? Well, over six weeks on and analysis from Zoopla shows it has been more positive than we might have thought. Here’s how, and why…
A rocket rebound
The figures from Zoopla highlight the interest in new-build homes is significantly higher than before Covid-19 took hold. Since the housing market reopened on 13th May, the new homes market has seen an impressive rebound with demand soaring by 66%. Compare that figure to the bounce back with older properties, which is 46% higher than before the country went into lockdown. For new build homes, the increase is significantly higher. And a lot of that demand, as expected, comes from first-time buyers. It all bodes very well for new build developers across the country, but why it is happening?
Why demand is high
The research from Zoopla cites two reasons why the new build market has seen such resilience. The first comes down to the immediate impact of lockdown itself. Whereas viewings are vital for older properties, it’s quite easy for new build homes to be sold virtually. Most of the leading developers are accustomed to selling new homes using technical tools. They are used to selling off-plan too, which has seen them able to sustain demand through the lockdown.
Another factor could be attributed to the withdrawal of the 90%, and 95% loan-to-value (LTV) mortgages by many lenders. This was done in response to the Covid-19 outbreak and subsequently may have led first-time buyers to seek different routes to getting on the property ladder. The Help to Buy scheme, for example, is only available on new build properties. First-time buyers need only a 5% deposit, with the rest topped up with a five-year interest free loan worth 20% of the value of the property. Such incentives may well have impacted the increase.
The demand across the country
One of the hotspot regions of the country which has seen the highest increase in demand for new build homes, is the North East. Interest in this area has escalated by a whopping 139% since the lockdown was lifted. After that, it is the West Midlands with an increase of 121%, followed by the East Midlands at 108%.
Across the whole country, there has been a flood of pent-up demand for property following the lockdown. Online searches and property sales have seen record figures. This applies to older properties as much as new build homes. But looking ahead to the future, and for new build homes especially, there is expectation for these figures to settle throughout the summer months.
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