The changing dynamics of the British Housing sector as the lockdown is relaxed in the country

The British government has finally decided to open up the housing sector after nearly seven weeks of lockdown. The sector which is an important determinant of the economic activity in the country had almost come to a standstill with severe disruption in sales and construction activities due to the coronavirus-induced lockdown.

United Kingdom which had just come out of the European Union, had been showing early signs of economic revival in the first two months of the year before the pandemic hit to the country. The housing construction companies in the country which are working on a national mission to provide thousands of affordable housing in a time bound manner are now to see those dates being missed grossly. Over and above that, the increasing unemployment rate and the state of business activity is such that most of the people would not be having an encouraging outlook about the economy.

Mortgage lender Halifax recently reported that price of houses have fallen by 0.6 per cent in April across the country compared to the previous month although on annual terms it rose by 2.7 per cent. While releasing the data, the company also stated that the actual price volatility measured could be biased as only few transactions had taken place since the lockdown had been in place.

The lockdown period, however, has seen a significant rise in the online viewing of properties by prospective buyers. Rightmove, who advertises more than 90 per cent of all houses listings in the United Kingdom on behalf of real estate agents, has stated that they have witnessed 45 per cent more visits on their website and there has also been 2115 new listings on its website last week. It is to be noted that the government had initiated the process of gradually opening the economy with specific social distancing and public health measures in place. The Prime Minister while making the announcement stated that those industries where social distancing rules are easier to implement will be the ones which will be the first one to open followed by others.

Only a couple of day back several London based brokers had said that they had been flooded with enquiries from people who wanted to move out of London to less crowded countryside places for the fear of the virus infection. The enquiries though on the surface seems to be spurring on account of the coronavirus but digging a little deep it would reveal the general public gloomy outlook about their livelihoods in the near to medium term future. The number of unemployed people in the country is at a record high and many more are still expected to register for unemployment benefits in coming day.

The Office of Budget responsibility, The Office for National Statistics and even the Bank of England have stated that the economy is set for a long term recession with steep fall in consumer spending. The pandemic which has impacted the crowded urban centres the most has accentuated the risk of living in crowded place and has prompted people to seek a safer and healthier lifestyle outside of the cities, especially London. It, thus, seems obvious that if a sizable number of people would want to leave cities the prices of house would drastically fall. However, the reports have not given any precise picture of commercial real estate prices in London or other major urban centres. It seems that London has been able to keep its importance intact as a major financial and trading destination of the world. But in the case of residential housing, the price fluctuation in prices of London properties is more violent than the rest of the country.

The expensive London properties are also one of the reasons that people are seeking to sell their London properties at current prices and move to less urban locations. Factors that may be aiding such decision making of Londoners may also be the work from home facilities that have been promoted significantly in the past couple of months in the country to sustain business activity levels while the lockdown is in place. Due to this facility many people could be starting to realize that it is better to live in a spacious semi -urban place where the quality of life will be better and still maintain the same productivity levels and earn as much as they used to while living in a smaller and crowded London neighborhood.

Given what the business scenario seems this year and in the next year, it is highly unlikely that employment situation would improve in the city. The social distancing measures and other safety protocols being recommended for the prevention of the coronavirus infection have been considered far more difficult to put into practice in a city like London. It is highly likely that people feel the burden and be uncomfortable to go to their places of work and earn their livelihood in such a setting compared to an option of moving to safe semi urban setting. As per their perspective, in a semi urban setting everyday life would be closer to normal and they would be much safer as those places are lot less crowded. Moreover, places like London are melting pots of different cultures, people from all over the world come here on a regular basis, raising the risk of spread of coronavirus.