The property market wakes up

When the property market reopened in mid-May, buyer demand surged to exceed pre-lockdown levels within days. Property portal Rightmove recorded its busiest ever day on 27 May – an 18% increase on the same day last year.
However, the coronavirus pandemic is far from over and its wider impact on the economy is not yet fully known. So, what has the property market awoken to?

House prices set to grow
In addition to increased buyer demand, there are other positive indicators for the market’s recovery. Zoopla’s latest House Price Index reveals that, not only is demand continuing to grow steadily (albeit not at its original pace), but that agreed home sales are now surpassing pre-lockdown levels. This would appear to contradict initial fears that the economic impact of COVID-19 would cause many movers to abandon their transactions.
House prices, the report continues, are also up on pre-lockdown levels, having grown by a healthy 2.4% between early March and May.
Moving forwards, the Index expects growth to hold steady at 2% in the months to come, although the wider economic downturn, which is currently being delayed by the government’s support package, is expected to exert a downward pressure on prices later in 2020.

Financial support measures set to end
As government support for workers and businesses gradually comes to a close, the property market is predicted to feel a significant knock-on impact. With the furlough scheme due to end in October, employees whose salaries were being paid by the government could face redundancy as cash-strapped businesses decide whether or not they can take on the full cost of their workers’ wages.
Meanwhile, those saving for a deposit may be forced to dip into those savings to cover daily living expenses and rental/mortgage payments once other measures (such as the mortgage payment holiday scheme and eviction ban) come to end, thus decreasing buyer demand further.
It is hoped, the Stamp Duty break, recently introduced by the Chancellor, should encourage people to move in the next few months.

Uncertainty prevails
Despite positive early signals, experts remain cautious as uncertainty surrounding the wider economic impact of coronavirus prevails. James Durham, an economist at PwC, said: “With considerable uncertainty in the economy, we still expect many people to put off making any major financial decisions until the outlook is clearer. This is likely to dampen the number of transactions that take place over the coming months, meaning a swift bounce back of the housing market is unlikely.”

Advice is crucial
It is clear that nobody really knows what’s around the corner for the property market. So, before pressing on with your transaction, speak with us first. We can advise you on the best mortgage deals and provide up-to-date guidance on issues that may affect you along the way.

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