Some 373,000 property transactions, with a total value of £82bn, are on hold after the Government effectively suspended the housing market as part of its measures to control the coronavirus outbreak, 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 this year.
Aside from the 373,000 sales suspended in the pipeline, which may complete later in the year, a handful of sales are still being progressed earlier in the process - 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 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 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, says Zoopla. 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 have bounced back more strongly over the last three weeks, but remain 35% lower than the start of March.
The latest UK Cities Report tracks the fall in demand up until the end of March and the scale of the subsequent rebound across UK cities. The drop in demand as a result of COVID-19 was up to 80% in Cardiff, while Newcastle registered a lower drop in demand (48%) where market conditions were already weaker. 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.