The Spring housing market showed signs of improved consumer sentiment, however, as we all know this was dampened by Covid-19 forcing the UK to go into lockdown.
On May 10th the government announced its conditional plan to ease lockdown and from Wednesday, May 13th the housing market was able to resume activity meaning estate and lettings agents in England have started their journey back to normality.
This year began with a newly elected majority government, boosting consumer confidence in the housing market. The first quarter of the year saw an annual increase in transactions of 0.4% in the UK. Annual house price growth reached 1.3% in England and Wales in March, and the average price of a property sold was £232,648. Mortgage approvals saw a quarterly increase of 0.8%, mortgage lending rose 1.0% and the average time to sell a property was four days shorter.
Nicky Stevenson from Fine & Country, says that with the housing market reopening in England and hopefully in Wales soon, we should see the housing market pick up.
She says: “It is possible that there could still be a short-term dip in house prices but the market is probably protected from major declines as, unlike previous downturns, this does not follow a spike in house prices, there is a good balance between supply and demand and banks are still prepared to lend, with fixed mortgage rates at an all-time low."
She notes that according to Zoopla, 373,000 sales agreed were placed on hold before the lockdown.
“Assuming that a proportion of those will fall through and on the understanding that lockdown is loosened from June, and normal sales activity resumes over the summer, we estimate that just under 880,000 homes will sell in 2020 across the UK, 25% fewer than 2019. Based on this, we can assume that August looks set to be a very busy month for agents” Stevenson predicts.
Nicky Adds: “We should see consumer confidence slowly recover as life begins to resemble normality again. That said, it could take time for people to feel secure in their jobs and build confidence to re-enter the housing market.
“For others, lockdown could be the impetus needed to move to a new house. Transactions are expected to be down in 2020 but to see progressive improvement from 2021. The RICS survey expects five-year house price growth to average just over 2.5% per annum.”
What other trends are we likely to see moving forward?
Stevenson says: “Covid-19 will likely leave a legacy of consumer behaviour change. Greater importance may be placed on homes having outside space and the premium already established for homes within close proximity to green space increasing. Lockdown has proved working from home is viable and even convenient. We do not envisage the death of the office, with the social benefits too great. However, working from home may become more common, shifting the relative importance of commute times, broadband speeds and home offices."
Talking about the upper tier of the market, she says that most prime markets have seen modest price growth over the last five years, and this should help to soften the impact of the pandemic. The prime market benefits from cash buyers and well-financed investors taking advantage of the market conditions.
She concludes: “Overseas investors may seize the opportunity to take advantage of exchange rate volatility and to act before the 2% stamp duty surcharge due to take effect from next year."