Virtual house viewings could pull the London property market out of the doldrums

The coronavirus lockdown has proved to be disastrous news for property markets all over the planet. London has been no exception. Prices here have fallen and estate agents have seen their commissions fall through the floor.

We can see an example of the effect this is having in Foxtons PLC (FOXT). This long-established estate agent now covers over 80% of the English capital. Yet, with commission falling by 47% in the first three weeks of lockdown restrictions, they have been forced to raise £22 million through a placing of ordinary shares.  

At the time of writing, lockdown measures are expected to be in place for some time yet. The authorities have no clear exit strategy yet defined for the UK. However, the use of virtual house viewing could help the London market to survive this tough period.

What are virtual viewings?

It is relatively common for new-build properties to be purchased without a physical viewing of the building. This is especially true in the case of foreign investors who are comfortable with splashing out based on plans, without visiting the UK.

However, it has traditionally been the case that existing properties are only sold following one or more viewings. With the current restrictions making that impossible, anyone who is keen to buy a house needs to decide whether to do so without visiting it first.

Rather than buying on a completely blind basis, they can use virtual viewing technology to get a good look around. This gives viewers the chance to undertake a 3D tour of the property on their PC or phone.

There have been relatively few sales of this type in the city so far. But the use of this technology offers a glimmer of hope for the beleaguered London housing market. Several estate agents have each confirmed closing a few deals of this type in the last month.  

The possibility of Asian and Middle East investment

China and other parts of Asia are slowly getting back to business and spending money again. The appeal of buying in the UK capital without travelling there could lure Asian investors into snapping up properties at bargain prices.

Some of London’s top estate agents have moved their most exclusive properties onto virtual viewing platforms. One notable success so far has seen a buyer in Hong Kong bidding £20 million for a centrally-located townhouse following a virtual viewing of it.

Other examples involve purchasers from the Middle East bidding £10 million for houses in London.

It could be used elsewhere

It is easy to imagine virtual viewing software being used in other parts of the world. This approach would stimulate housing markets that have become virtually frozen due to the lockdowns being imposed.

It should be easier for someone who knows the area to decide upon a property in this way. However, the amount of information available online means that it certainly isn’t impossible to do all of the necessary research on a completely new area.

With traditional housing sales unlikely to start up again anytime soon, this virtual approach could save the markets in many parts of the world. As we have seen, it has mainly been used so far in the ultra-prime London market. It could eventually be rolled out to cover any type of property anywhere.