Despite estate agents and surveyors in England only being able to return to work from the middle of last month, the number of homes sold increased by 16 per cent, with a total number of 48,450 completed sales in May, compared to the 41,760 residential sales recorded in April, according to seasonally adjusted figures. While encouraging, these figures do illustrate the impact of the Covid-19 pandemic on the UK housing market, as when viewed against the 96,050 homes sold in the UK in May 20190, today’s figures illustrate a 49.6 percent decline.
Guy Gittins, Managing Director of London estate agency Chestertons commented: “The latest figures from HMRC show that the UK property market is recovering much faster than many anticipated following the lock-down, evidencing that coronavirus has not shaken people’s confidence in property.
“If sales continue at this rate, especially as they are supported by low mortgage rates, we could see prices recover a lot quicker than many have predicted.
“In London, we have seen a frankly astonishing upsurge in the number of people looking to buy since the market re-opened in mid-May.
“Property viewings have tripled, while website enquiries and the number of new buyers registering has more than doubled.”
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Guy continued: “With everyone stuck at home and travel plans on hold due to lockdown restrictions, many people are re-thinking what is really important to them in a home.
“Properties offering gardens, balconies, roof terraces and home office spaces, as well as a fast and reliable internet connection are more popular than ever and offers are being agreed at increased prices as a result of demand.”
Former RICS residential chairman Jeremy Leaf observed: “As always, it is property transactions rather than the more volatile prices which prove to be a better barometer of market strength and these are no exception.
“Although, of course, the numbers represent activity initiated several months ago, so are historically disappointing, they do show as well a welcome enthusiasm to pick up on transactions which were stalled and engage in new deals, which is exactly what we are finding on the ground.”
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Jeremy added: “Looking forward, listings are increasing which is encouraging and likely to bring more balance. But on the other hand, we have concerns that most of the demand is for smaller family houses rather than smaller flats as aspiring first-time buyers remain concerned over future employment prospects post-furlough.”
It’s not just employment concerns which are potentially hampering those taking their first steps on the property ladder.
Access to low deposit mortgages is also currently very restricted, with recent a report from financial data provider Moneyfacts highlighting that there are now only 40 mortgage products available for those with a 10 percent deposit, and the total number of five percent deposit mortgage products has fallen by half to just 16 deals available.
Eleanor Williams of Moneyfacts explained: “It may be disappointing for prospective borrowers to see more contraction again in the higher Loan To Value mortgage market, but this arena has been significantly impacted by the Coronavirus pandemic, and these are unprecedented and uncertain times for borrowers and lenders alike.
“As well as operational difficulties and high levels of pent-up demand unleashing as the property market re-opened, there is also concern around the possibility of negative equity, as there is the worry that potentially property prices may drop in the months to come.”
Eleanor concluded: “If borrowers are looking to explore their purchase or remortgage options with only a small deposit or low level of equity, they would be wise to seek independent financial advice to go through their options, as what is available and the criteria and requirements of providers is a very fluid landscape at the moment.”
The big question is of course what can we expect to see next for property prices?
Potentially, in the short term we’ll see the current impetus continue, according to Tom Bill, Head of UK Residential Research at Knight Frank.
He suggested that since the market re-opened: “There has been a dramatic but potentially short-lived surge in demand that will be reflected in even higher transaction numbers in coming months.”
But as the Prime Minister unveils the latest guidelines today to the UK economy moving again, whether this will have enough of a positive, long-term to stave off a wider housing market downturn remains to be seen.
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