UK housing demand soars since end of Covid lockdownAugust 27, 2020
Demand for houses has soared since the lockdown ended, according to a report from Zoopla, with three- and four-bedroom houses with space to work from home particularly popular.
Properties are selling far faster than before the pandemic struck, the report said, as buyers flooded back to the market. The amount of time a home is put up for sale before it finds a buyer has fallen to just 27 days since restrictions were eased, compared to 39 days over the same period in 2019.
Big homes in the countryside are shifting fastest, while urban flats typically aimed at first-time buyers are now the slowest market segment.
“Four- and five-bed houses are selling 33% faster than in 2019, as buyers prioritise more space and widen their search criteria – migrating away from the more expensive cities, suburbs and commuter belts while enabling their budgets to stretch further. Meanwhile, flats are taking the longest time to sell,” the property website said.
It said that sales of houses listed on its platform are 76% higher than the five year average, driven by pent-up demand since the lockdown plus the temporary cut in stamp duty on properties up to £500,000 announced by Rishi Sunak as the centrepiece of his summer financial statement in July.
Prospective buyers are also finding little to choose from, with the stock of houses on sale at estate agents down 3% from last year’s levels.
The robust property market is in sharp contrast to the state of the UK economy, which contracted far more than that of any other developed country in the second quarter of 2020, according to figures from the OECD. Richard Donnell of Zoopla said: “The ‘once in a lifetime’ re-evalution of housing requirements on the back of the lockdown is a counterweight to the impact of the recession on the UK housing market.”
The usual August slowdown in the property market almost disappeared this year, with holiday season sales running 78% higher than last year. However, as schools reopen and the furlough scheme and other government support unwinds, the property market could be “challenged”, said Zoopla.
Most property forecasters pencilled in price falls for the UK property market during 2020, with Savills saying in June that it expected a 7.5% decline in prices this year followed by a 5% rebound next year.
But Halifax reported earlier this month that house prices in Britain leaped to a new high in July, in a “surprising spike”. The bank said a “mini boom” in the market had pushed average property values up by 1.6% – or £3,770 – month-on-month in July and meant the annual rate of growth increased to 3.8%.
Zoopla is now forecasting that house prices will end the year 2-3% higher than at the start: “Extensive government support for the economy and labour market, together with support for mortgage holders, has reduced the number of forced sellers and limited the downside for house prices. While the economy has contracted sharply and unemployment is rising, consumer spending has rebounded and various surveys of economic activity are pointing to a wider rebound in the economy.”
The Financial Conduct Authority (FCA) on Wednesday issued fresh guidance to mortgage lenders, telling them to extend forebearance to householders who are coming to the end of their payment holiday but are still in financial distress.
Around two million people have taken a mortgage holiday since the pandemic began, equal to around one in six of all mortgages in the UK. Applications under the mortgage holiday scheme can be made until 31 October.
In its letter to lenders, the FCA said that it expects “customers [should] receive appropriate forbearance that is in their interests after consideration of their individual circumstances”, and “firms [should] support their customers through a period of payment difficulties”.
Charlotte Nixon, mortgage expert at Quilter Financial Planning, said: “Assuming that the payment holidays are not extended past October, the guidance is clear that the onus is still very much on lenders to help customers get through this difficult period.”
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