The Impact of Covid 19 on the New homes Market for 2020.......

The effect of Covid-19 on the housing market is likely to come from a number of areas.

·         The fall in production as a result of time lost on new home sites.

·         Delays in connection of mains services to new home sites, due to social distancing rules.

·         Cautiousness and uncertainty even with the most committed of buyers.  

·         The practical impact it has on buyers’ and sellers’ ability to transact, as social distancing rules limits people’s ability to go about their normal business

·          Its impact on the economy and the traditional drivers of affordability.

Under normal circumstances it can take anywhere from four to ten months to construct a new home.  There is no denying that Covid 19 will negatively impact on housing supply this year, with forecasts predicting that we could see a reduction of completed units fall anywhere between 20 – 35 %.

The main concern across the board is the ability for buyers to acquire mortgages, given the employment losses throughout the Country arising from Covid 19. This factored in with purchasers with existing mortgages having to be reassessed will negatively impact on lending.   

There is no question the demand for new homes will be affected by mortgage challenges and the uncertainty in the economy, but the reduction in supply should minimise this.  Prior to the  Covid-19 pandemic, supply was still well  below the estimated 35,000 new units needed annually, so the fall in production and supply  this year should  increase this shortfall,  that’s even taking into  account the negative demand effects arising from Covid-19. As a result, buyers seeking to purchase and move into a new home in 2020 will ensure continued demand for the reduced level of stock delivered in 2020.

Going forward sellers will undoubtedly need to remain pragmatic on pricing over the course of 2020, as demand becomes now more than ever dependent on supply.