Demand for new build homes has soared by 66% since the housing market reopened, surpassing levels seen before lockdown.
The upsurge seen in the six weeks since 13 May is a continuation of the trend recorded at the start of 2020, when the new build market enjoyed its strongest start to the year since 2016.
Persimmon Homes, one of the UK’s largest home builders, has seen a massive 215% month-on-month jump in demand through Zoopla buyer leads during the past six weeks. Leads are generated by buyers requesting more information from home builders via property listings.
The recovery in the new build homes sector significantly outpaces the revival in the market for older properties, where demand is currently 46% higher than before lockdown.
The surge in demand for new build properties has been particularly strong among first-time buyers, growing by 87% compared with levels during lockdown.
Alex Rose, director of New Homes at Zoopla, said:
“While the industry has undergone an unprecedented period, the new homes market has shown itself to be geared towards a rapid rebound.”
Why is this happening?
The resilience of the new build market is likely to be down to two factors.
On the one hand, developers are used to having to sell homes when physical viewings are not possible.
Mark Cook, group sales and marketing director at Persimmon Homes, said:
“Our experience in offering virtual viewings, exceptional computer-generated imagery (CGI), and understanding what it takes to sell off-plan, enabled us to sustain demand, even when the market was suspended at the height of the lockdown.”
At the same time, demand is also likely to have been supported by the fact that the Help to Buy scheme can only be used to purchase a new build property.
With many lenders withdrawing their 90% and 95% loan-to-value (LTV) mortgages in the face of the pandemic, more first-time buyers in particular are likely to be turning to the scheme in a bid to get onto the property ladder. The Help to Buy initiative tops up a 5% deposit with a five-year interest-free loan worth 20% of the property’s value
Who does it affect?
The North East has seen the strongest rise in demand, with interest in new build homes soaring by 139% since lockdown was lifted.
The West Midlands is not far behind with a rebound of 121%, followed by the East Midlands at 108%.
Wales recorded a 74% jump in demand in the six weeks to 21 June, despite the fact the market did not reopen until 22 June. Meanwhile, Scotland recorded a 33% in demand, even though the market remained closed until 29 June.
What’s the background?
First-time buyers are often described as being the lifeblood of the housing market, so it's good news for the new build sector that demand is so strong among this group.
Going forward, Rose expects the initial spike in demand for new properties seen since the housing market reopened to 'settle' as the summer progresses and sales are agreed.
“First-time buyers will no doubt uphold a level of demand, with many keen to make the most of Help to Buy, following the withdrawal of many 90% LTV mortgage products,” he says.
Our research comes as Prime Minister Boris Johnson unveiled plans for more than 180,000 new affordable homes to be built. He also announced changes to the planning system to make it easier to convert commercial buildings into residential ones, and to demolish vacant buildings and use the land to build homes.
Property owners will also be able to build additional space above their properties through a fast-track approvals process.
Top three takeaways
Demand for new build homes has soared by 66% since the property market reopened, surpassing levels seen before lockdown
The upsurge seen in the six weeks since May 13 continues the trend recorded at the start of 2020, when the new build market enjoyed its strongest start to the year since 2016
The recovery in the new build homes sector significantly outpaces the revival in the market for older home, where demand is currently 46% higher than before lockdown