According to the latest UK Cities House Price Index by Zoopla, the majority of the sales were agreed between November 2019 and February 2020, and would have been set to complete between April and June.
A market in suspended animation
These suspended pipeline sales may well complete later in the year, but a handful of sales are still being progressed – with deals being struck Sold Subject to Contract, largely based on viewings and progression of sales that took place ahead of the lockdown.
New sales agreed are running at a tenth of the levels recorded in early March, with volumes similar to what you would expect to see in late December. Some buyers seemingly want to press ahead with agreeing sales, encouraged by government support for the economy and low mortgage rates.
The rate of fall-throughs peaked on 23 March, the day of the lockdown, and has fallen back as the volume of new sales being agreed declines. 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.
The rise and fall of housing demand
The demand for housing fell by 70% between the start of March and the week ending 29 March, with the greatest decline recorded ahead of the lockdown. The drop in demand bottomed out in early April and has since started to improve slowly off a low base.
Despite a steady increase in buyers looking for homes, demand still remains 60% below the levels recorded at the start of March.
While households are unable to view homes for sale in person, they can still browse online. Browsing of property listings fell in line with demand but to a lesser degree. Levels bounced back more strongly in April, but remain 35% lower than the start of March.
Housing sales to be 50% lower in 2020 compared to 2019
Zoopla’s latest forecast is that completed sales will be 50% lower in 2020 than 2019, allowing for a proportion of stalled sales to complete and with a delay to sales that would have progressed.
The positive news is that the total number of properties for sale at the end of April is just 4% lower than levels registered at the start of March. This is a good sign to ensuring a faster rebound to full market health once coronavirus restrictions are lifted.
Comment
Richard Donnell, director of research & insight at Zoopla, said: “There is a two speed housing market at present. Parts of the market are at a virtual standstill as a result of the physical restrictions that have stopped new supply coming to the market and the viewing of homes for sale.
“However, the online browsing of homes for sale and buyers expressing interest in property have been rising off a low base over the last two-three weeks. Demand for housing is still 60% lower than at the start of March, but we expect interest in housing to continue to improve slowly.
“Northern cities have seen the strongest improvement in underlying demand although levels remain half those at the start of the crisis.”
Over the last two weeks, demand for housing in cities across northern England has rebounded more strongly – notably in Manchester, Liverpool and Leeds. 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.
Donnell continued: “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.
“That said, the case for a stamp duty holiday to support a resumption of market activity is clear and a high proportion of savings are likely to be spent, further stimulating economic activity.
“We expect completed housing sales in 2019 to be half of those in 2020, having lost close to two full months of market activity by mid-May, and taking into account time for agents to rebuild sales pipelines.”
