When lockdown was enforced back in late March, it was plain to see that the UK property market was going into lockdown with the rest of us. Months of inactivity and worryingly low numbers saw our industry forced into a suspended animation, as the economy took a nose dive in the wrong direction. Early consensus was that the recovery would not be quick, and it could be years before we saw stability return to the market.
But as with the rest of this year, we have seen something unprecedented and unpredictable at work as the real estate market has risen to heights we did not think were capable even by next year, let alone by this summer. During lockdown, the demand was still there but the supply had ground to a complete halt, with economic unrest and severe restrictions making it near enough impossible for estate agents to acquire new stock.
The supply-demand gap is, however, starting to shrink. New research from Zoopla has shown that the growth of new supply over the last month has run 50% faster than the same time last year. And thanks to the holiday on Stamp Duty, and buyers interest being driven by new property requirements due to lockdown, we are seeing an unseasonable uplift.
During the summer months, the property market inevitably quietens down with many people pausing their new home search whilst they holiday. But this year has been different, with the market opening back up in May after months of being on hold, houses have been selling at a much faster rate throughout the last few months with transaction periods lasting for just 27 days on average – 31% lower than this time last year.
House price growth is also on the rise at their fastest rate in 16 years, with many agents reporting properties are in fact being sold for asking price – if not more. The House Price Index recorded a growth of 2% or more, which is extremely positive in the best of times – let alone during a global pandemic.
So, what is in store for the rest of the year and the early months of 2021? Acknowledging we are currently in a deep recession and sales are already down by 30% due to the Covid-19 pandemic, it is expected house prices will still be 2-3% higher by the end of the year, compared to the start of the year. Zoopla gives three reasons for this positive forecast:
“Firstly, house prices are rising at low rates and a jump in forced sales seems unlikely. Lenders are supporting existing borrowers and credit is still available for buyers seeking low loan-to-value mortgages.
Secondly, unemployment is rising but it appears to be focused on the younger generation who are typically renters rather than homeowners.
Thirdly and finally, mortgage regulations restrict borrowers’ ability to ‘bid up’ the price of housing – and therefore limit the downside for house prices.”
