The rest of the UK have also begun to ease lockdown. While it may take time for consumer confidence to return to the market, we are heading in the right direction.
So, what did we see in the housing market during lockdown?
Nicky Stevenson, MD of Fine & Country UK, comments: “Although this is around half the level of transactions we would normally see, it is still higher than expected. It is going to take some time for the estimated 370,000 transactions delayed due to Covid-19 to work through the system, and therefore many of these sales will appear in summer transaction figures.
“During April, 15,848 mortgages were approved, and gross mortgage lending was £14.4bn. As expected, this is also much lower than ‘normal’ levels, but it shows there was movement and demand in the housing market even during lockdown.”
What will the impact be on housing prices?
Stevenson says: “It is too early to gauge the full impact that Covid-19 has had on house prices.
"The Nationwide House Price Index reports monthly house prices down -1.7% in May. However, house prices only reflect properties that were sold, and with so few transactions during lockdown, this should be viewed with caution. Government schemes such as furlough and mortgage holidays, as well as the relatively unstretched financial positions of existing homeowners will help contain pressures and therefore reduce the impact Covid-19 has on house prices.”
She adds that given the relationship and impact the housing market has on the greater economy, it was always going to be the Government’s priority to get people moving. Since the housing market was re-opened in England on 13th May, Rightmove reported a release of pent-up demand, with 5.2 million site visits, 4% higher than a year ago.
Nicky says: “During lockdown there was a significant drop in mortgage products available, especially high loan to value products, as physical valuations were unable to take place. Since the English market has re-opened, lenders have started to re-launch products and loosen the loan to value cap. This is very encouraging for the housing market. With fixed mortgage rates at an all-time low based on interest rates of 0.1%, for some, it presents a good opportunity."
According to the Dataloft Homemover Survey, 95% of vendors whose homes were on the market before lockdown still intend to sell and 92% of buyers who were searching for a new home before lockdown still intend to purchase a new home. Eight out of ten vendors who are looking to sell their homes as soon as possible say that they are either very or fairly comfortable with physical viewings taking place, as long as social distancing measures are in place. This renewed confidence in the market led to an 111% increase in sales viewings booked the week of 18th May according to The Property Market Insights Report by Coadjute. Stevenson says that based on this information, agents look set to have a busy few months.
What lies ahead?
Stevenson explains: “There is no doubt that it is going to take time for consumers’ confidence to increase and making big financial decisions will seem daunting to some. However, early indicators suggest that many are still able to enter the housing market and are keen to do so. It is expected that transactions will take between six and nine months to recover to pre-Covid-19 levels and prices to take 11 months. Long-term house price expectations are still strong, with an average annual increase of 2% expected over the next five years according to RICS".
She concludes that we can also expect a shift in patterns: “The Dataloft Homemover Survey revealed that just under half of buyers’ requirements have changed since lockdown. 30% of buyers said that a garden has become much more important. Space to work from home and broadband speeds had also increased in importance, reflecting expectations that working from home will become more regular."
