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Lockdown conditions have left 373,000 property purchases stuck in the system, says property website Zoopla in its latest UK Cities House Price Index.
Mostly comprised sales agreed between November 2019 and February 2020 and worth an estimated £82bn, these transactions would normally have been completed between April and June. They still ‘may complete’ later in the year but ‘the outlook for sales progression depends upon how long the restrictions remain in place, the scale of the economic impact, and how this impacts would-be buyers and their ability to proceed with sales’, said Zoopla.
For now, uncertainty about the future of the housing market continues while estate agents face the possibility of missing out on £1bn in revenue.
Zoopla, however, remains reasonably optimistic about the future once the coronavirus crisis has passed.
Demand for homes, as measured by enquiries and online browsing, fell by 70 per cent in March but has now bottomed out. ‘There has been an increase in demand over the three weeks to 19th April’, said Zoopla.
‘Browsing of property listings fell in line with demand but to a lesser degree. Levels have bounced back more strongly over the last three weeks, but remain 35 per cent lower than the start of March.
Meanwhile, ‘the number of homes for sale is just 4 per cent lower than at the start of March, signalling no mass withdrawal by vendors’.
Amazingly, new sales are still being agreed during the lockdown, albeit at a tenth of the levels recorded in early March. ‘Some buyers seemingly want to press ahead with agreeing sales, encouraged by government support for the economy and low mortgage rates’, said Zoopla.
Even so, with the long lead time between the ‘sales agreed’ and ‘completion’ stages, this suggests total house sales completed this year could be half those of last year.
Not all areas are affected evenly. The drop in demand was up to 80 per cent in Cardiff, but only 48 per cent in Newcastle, ‘where market conditions were already weaker’. Over the last two weeks, demand for housing in cities across northern England has rebounded more strongly – notably in Manchester, Liverpool and Leeds, said Zoopla.
‘These are all cities where 2020 started strongly and where housing affordability remains attractive, and where we could see a faster bounce-back when restrictions lift.
‘By contrast, higher value cities such as Cambridge, Edinburgh and Southampton have not yet recorded any material improvement in demand over the last few weeks’. There are still low levels of demand but a limited improvement so far.
It is too early to predict the overall effect of the coronavirus crisis on house prices although the latest Cities Index registered the lowest monthly growth for over a year, at 0.1 per cent – just a third of the monthly growth rate recorded in January and February. ‘The five best performing cities recorded year-on-year growth of over 3 per cent, with Nottingham leading the charge with an annual growth rate of 4.1 per cent’, said Zoopla.
‘Without doubt, once the coronavirus restrictions are relaxed, we should expect the release of demand that has been building since Brexit and political uncertainty destabilised market sentiment’, commented Zoopla director of research & insight, Richard Donnell.
‘Many households have spent more time at home in the last few weeks and some may feel the urge to move and find more space or consider the potential for remote working. This could boost activity in the second half of 2020, but this all depends upon how much the economy is impacted over the rest of the year and the impact on levels of unemployment. It is too early to register any pricing impact given new sales volumes are 90 per cent down on the start of March. Demand is rising but there is a long way to go until we see a return to typical levels of market activity’.