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UK Property Sales Picking Up Steam

03.06.20

Zoopla is reporting that interest in properties for sale has bounced back to exceed pre-lockdown levels, two weeks after the Government eased restrictions to re-open the market.

The release of pent-up demand from the 13th May pushed “active engagement” in properties up 88% from the previous week – to 20% higher than at the start of March. This is “an unprecedented, but temporary, bounce back”, says the portal, which is anticipating the flurry of demand to be “short-lived” as the country suffers “a major decline in economic growth and rising unemployment” as a result of the pandemic and lockdown.

More than four in ten (41%) UK buyers surveyed by Zoopla said that they have put plans to move home on hold, citing market uncertainty, loss of income, and diminished confidence in future finances as deterrents.

The majority (59%), however, are still looking to crack on with a property purchase, with 22% reporting that Covid-19 has had no impact on their home search.

While demand has clearly surged, actual deals are understandably taking longer to materialise. New sales agreed (sold subject to contract) were running at 10% of normal levels over the lockdown period. They have now started to increase off that low low base, but Zoopla is expecting a lag of around two months before interest translates to sales.

The scale of the bounce back in demand last week (to 17th May) varied across cities. London did see a marked surge in active engagement with portal listings, but the capital’s recovery “is lagging behind,” says Zoopla, alongside Scotland, Wales and Northern Ireland  – where restrictions on moving home are still in place.

Zoopla’s data indicates that buyer activity has rebounded faster in cities along the south coast and in northern England, rather than in London’s commuter zone. Portsmouth and Southampton are registering demand some 40% higher than in February this year, with strong growth also recorded in Newcastle and Leeds.

Rebound in demand across UK Cities – daily demand in week ending 17 May compared to average for whole of February 2020

Around 373,000 property sales were stalled by the lockdown, according to Zoopla’s count. It remains to be seen how many of those deals are picked up and manage to complete… “The latest data suggests a small pick-up in the rate of fall throughs since 12th May,” says the portal, “but at levels well below the average for this time of year. We currently expect a significant proportion of agreed sales to continue, but increased uncertainty over the economic outlook will see housing chains tested in the coming weeks.”

The annual rate of house price growth in UK cities fell from 2% to 1.9% from March to April, representing the lowest month on month change since January 2019, and prices were unchanged in April.

Zoopla expects “the slowdown in the rate of growth to become more marked over the summer months”, as the impact of the market suspension and coronavirus lockdown emerge in house price data for new sales. “Whether house prices fall will be determined to a great extent by the Government’s preparedness to provide ongoing support to the economy while lockdown restrictions are slowly lifted,” the team notes.

Richard Donnell, Director of Research & Insight at Zoopla: “The scale of the rebound in demand for housing is  welcome news for estate agents and developers, but it is also surprising given projections for a sharp rise in unemployment and a major decline in economic growth.

“The COVID crisis and 50 day lockdown have created an unexpected one-off boost to housing demand. Millions of UK households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting. Many households are likely to have re-evaluated what they want from their home. This could well explain the scale of the demand returning to the market. We need to see more supply come to the market to satisfy this demand.

“The economic impacts of COVID will grow in the coming months and uncertainty is building. The majority of would-be movers plan to continue their search, encouraged by low mortgage rates and continued Government support for the economy. However, we expect the latest rebound in demand to moderate in the coming weeks as buyers and sellers start to exert greater caution. Further support from the Government can’t be discounted and would help limit the scale of the downside risks.”

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