The latest data from Home.co.uk on asking prices has revealed that not only have vendors returned to the market, they have come back braver than before and are pricing higher.
Home's data covers June, roughly a month after the market reopened and shows that, counter to the doom and gloom that has dominated the media recently, vendors are showing considerable confidence and less caution than might be expected.
However, considering the overall lack of supply (there are only around 40% of the new listings one might expect for the month of May), their bullishness would seem justified.
Supply was already low a year ago, according to longer-term trends, and the mere trickle of properties entering the market is highly unlikely to surpass demand. Moreover, it is clear that there is considerable pent-up demand post-lockdown, so much so that several major lenders have temporarily withdrawn 90% LTV products citing overwhelming demand, especially from first-time buyers.
The fact is that the market is currently in a state of transition and the new normal is yet to be defined. We anticipate that it will take two to three months for the market to find its new post-pandemic equilibrium.
The UK property market began the year with a plethora of encouraging activity and post-correction regions showed considerable potential for price growth. The optimistic scenario would be a return to this positive trend, although demand will certainly be tempered to some degree by a mortgage credit bottleneck and the economic damage sustained by the lockdown cannot be ignored. The key question remains 'How vigorous will be the rebound be?' Indications thus far suggest the market is taking off with an unprecedented sense of urgency.
What is blatantly clear is that the situation could have been a whole lot worse. The annualised mix-adjusted average price growth across England and Wales currently stands at +0.8%; in June 2019, the annualised rate of increase of home prices was -0.6%.