It’s been over a month since the Secretary of State for Communities and Local Government, Robert Jenrick, officially re-opened the English property market by lifting restrictions on estate agents and the buying and moving process.
It was the announcement we’d all been waiting for and the industry breathed a collective sigh of relief at the end of the seven-week freeze. Perhaps things were finally returning to some semblance of normality.
But where are we nearly 6 weeks later? Is the housing market really ‘back’ in any meaningful sense of the word? And what can we expect for the rest of 2020 and beyond?
As of early June, the property market appears to have simply picked up where it left off pre-pandemic. Figures released by TwentyCi group reveal that the exchanges are being recorded at 68% of the same period in 2019, not bad given its two-month hiatus. Meanwhile, the market as a whole is operating at around 75% of the norms we saw throughout 2019.
And this sunny outlook is being replicated elsewhere too. The Yomdel Property Sentiment Tracker is claiming that demand from vendors and landlords has risen to all-time highs. It’s results for the week ending 7th June show new enquiries from vendors seeking valuations skyrocketing.
The number of vendors seeking a valuation rose 34% to hit 85% above pre-coronavirus levels. It appears that having put moving plans on hold, people are swarming onto estate agents platforms in a bid to get things moving again and into a new home before the summer is over.
So if the present state of the property market looks hopeful, what of the future? Well, it’s ultimately pretty mixed. Although, nothing like as bad as might have been expected after the last few months.
National estate agency, Savills, produces an annual five-year prediction for the housing market and has revised it’s November 2019 edition in light of the coronavirus pandemic. This new version makes for very interesting reading.
The property giant expects UK house prices to dip slightly throughout the rest of the year, dropping by 7.5% by the end of 2020. However, perhaps more importantly, Savills is standing by its original prediction of a 15.1% growth across the country by 2024. After the -7.5% fall this year, the data predicts a bounce-back of 5% for 202, followed by house prices rising by 8% in 2022, before returning to a steady 5% and 4.5% for the following two years.
Savills puts this bullishness down to factors such as better mortgage affordability and a ‘backlog effect’ of pent-up demand for UK housing. It also expects the market to closely shadow UK GDP, which is expected to fall during 2020 and bounce back in 2021.
However, all this good news should come with a side of caution. There are still some major challenges ahead.
Firstly, payment holidays are still in place for as many as one in seven mortgages. It remains to be seen how smoothly these will transition back to normal payments once things stabilise, particularly given we’re likely to see a tough employment market for the rest of 2020 and beyond.
There’s also the first-time buyer elephant in the room. Demand for first-time property far outstripped demand pre-coronavirus, and this has only been made worse by months of downtime. Many lenders are withdrawing from the 90% LTV market, making it even more difficult for new buyers to get onto the ladder. Indeed, only 50% of mortgage products available pre-COVID are still on offer.
On top of this, we still aren’t building enough new houses. The new-build market, which was already struggling to meet the number of properties required, has been set back further by a nearly two-month pause. It’s worth noting, however churlish it might sound, that all the demand in the world isn’t much use without a steady supply of new homes.
Finally, it’s important to note that we just don’t know what comes next. The rest of this year could see the UK economy rally and return to the growth we saw pre-COVID, or it could be hit by a hard Brexit (yes, that again) and a debt crisis. As things begin to return to something like normality, let’s all pray it’s the former.