According to newly released figures from Zoopla, six weeks on since the property market reopened on 13th May, demand for new homes has rebounded 66%, with demand levels outperforming those recorded pre-lockdown at the start of March.
The recovery is thought to be a continuation of the upsurge in demand recorded at the start of 2020, when the property market recorded its strongest start to a new year since 2016.
While resale properties have also registered a significant recovery in demand, the rebound is currently tracking at 46% in the week to 21st June.
The recovery in demand for new homes follows a less significant fall in demand, compared to resale properties, in the immediate aftermath of the COVID lockdown and subsequent market suspension. In the week to 5th April, demand for new homes had fallen -53% compared to a -71% decline in demand for resale properties.
Strongest sales rebound in the Midlands and the North
The North East topped the regional list of areas to resurge the highest, with an upsurge in demand of 139%.
The West Midlands was second in the list of demand recovery, registering a rebound of 121% to 21st June. Meanwhile, the East Midlands was third, with a 108% recovery in demand across the same period.
Of note, Wales recorded a 74% rebound in demand after an initial fall in early March to 21st June, despite the fact its market didn’t reopen until 22nd June. The same pattern occurred in Scotland; even though the market doesn’t reopen until 29th June, the rebound in Scottish demand for new homes recovered 33% over the same period [ahead of the South West at 23%], which bodes well for positive market performance thereafter.
First-time buyers motivate the new homes market
First-time buyers - often regarded as the engine of the sales market - are driving forward a significant proportion of demand for new homes. While first-time buyer demand for new homes fell -68% between 8th March and 5th April, it has since recovered 87% in the period to the 21st June.
Government incentives, such as Help to Buy, which support first-time buyers as they buy their first property, explain in part the demand for new homes amongst this cohort. As some lenders withdraw higher loan-to-value mortgage products, it’s likely that more first-time buyers will look to the support schemes exclusive to the new build sector to help bridge the deposit gap and take their first step onto the property ladder.
Mark Cook, Group Sales & Marketing Director, Persimmon Homes, said: “In many regards, the new homes market rose to the challenges presented by COVID-19.
“While nothing beats building a rapport with a customer, our experience in offering virtual viewings, exceptional CGIs, and understanding what it takes to sell off-plan, enabled us to sustain demand, even when the market was suspended at the height of lockdown.
“That said, since the market reopened, buyer demand has rebounded at a remarkable rate. In the month that followed the reopening, we recorded a 215% uplift in the buyer leads that we receive from Zoopla compared to the month before, which is symptomatic of the strength of the new homes market.
“We feel this bodes well for the weeks and months ahead, and look forward to helping more buyers - from first-timers and seconds steppers to downsizers - find their dream home.”
Alex Rose, Director of New Homes, said: “While the industry has undergone an unprecedented period, the new homes market has shown itself to be geared towards a rapid rebound.
“Despite the pressures exerted by lockdown and social distancing, many new homes developers are accustomed to using technology in their day to day operation, harnessing CGIs and virtual viewings to immerse their home buyers into their product. This enabled many to continue selling - albeit, remotely.
“Selling off-plan is also par for the course in the new build sector, but for those buyers who wanted to view properties in person since the market reopened, they have been able to visit empty properties or show homes rather than an occupied home, making social distancing easier to navigate.
“We expect this initial spike in demand to settle as the summer progresses, but also for that demand to convert into sales 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% loan-to-value mortgage products.”