Housebuilders, estate agents rally as housing market reopens

Shares in London-listed housebuilders rallied after the government said the housing market could reopen, with renters and buyers now free to move house.

As of Wednesday, estate agents can get back to work and show homes can open, while property viewings in person are now allowed. Conveyancers and removals firms can also return to work while following social distancing guidelines.

Previously, coronavirus guidance implemented in March meant that buyers were only allowed to move home where "reasonably necessary". It is estimated that more than 450,000 buyers and renters have been unable to progress their plans to move since March.

Andrew Montlake, managing director at the mortgage broker Coreco, said: "There is still a long way to go before we have a fully functional housing market but this is a tentative first step in the right direction and cause for celebration.

"The great unknown is how cautious surveyors will be with their valuations and lenders their criteria but that will become apparent in the days and weeks ahead.

"Demand is certainly still there. We have received a lot more enquiries in May, with many people now looking to move to more rural areas given the perceived reduced risk from future peaks and pandemics."

Hansen Lu, property economist at Capital Economics, said that while loosening coronavirus restrictions mean activity will soon start to recover, progress will be slow.

"Our best guess is that at least a quarter of ongoing sales will end up cancelled. Many others will be delayed as buyers assess their job prospects, seek discounts, or wait to see if prices fall," he said.

Lu said a weakened economy, uncertainty and behavioural shifts from the coronavirus will hamper the housing market recovery. "By the end of the year, we expect housing sales to still be well below their pre-virus level."

Still news of the housing market’s reopening boosted housebuilders, with Barratt Developments, Taylor Wimpey, Persimmon and Berkeley all firmly in the black, while estates agents Foxtons, Purplebricks and Savills also gained.

Russ Mould, investment director at AJ Bell, said the need to get Britain building again "is arguably pretty acute" as even a short disruption could set back attempts to build enough new homes to meet demand over the long term.

"Several builders have started to resume activity on site, with Crest Nicholson today the latest to announce its plans to do so. Crest Nicholson is a bit behind the curve with some of its peers already having been back at work in some fashion for several weeks," he said.

"Taylor Wimpey’s update this morning feels like a further significant step towards some kind of normality as it announces plans to reopen sales offices and show homes. This move is accompanied by measures we may have to get increasingly used to in the coming months with pre-booked appointments, perspex screens and social distancing markers likely to be part of the new normal across a range of sectors."

However, he said it remains to be seen whether people will feel confident enough to buy and sell homes in the current uncertain environment.

"The fact several builders managed to complete transactions and take reservations through the lockdown suggests an impressive degree of resilience in the housing market," Mould said.