Property market demand exceeding pre-lockdown levels

Pent-up demand in the property market is now exceeding the levels recorded before the UK went into lockdown, new analysis from Zoopla has revealed.

The property expert stated that following the Government’s decision to reopen the property market, demand for sales jumped by 88% in the week that followed 12 May, and was 20% higher than at the start of March.

With projections for a major decline in economic growth and rising unemployment, however, Zoopla warned the rebound in demand is expected to be “short-lived”. After the market was suspended for 15% of the year at one of the busiest times for market activity, Zoopla called a return of pent-up demand “expected”, after a strong start to the year.

By reopening the market, the property expert also suggested the Government had improved the chances of a higher proportion of stalled transactions completing, than if the market had stayed closed for longer, but added that the latest data still showed a small pick-up in the rate of fall throughs since 12 May.

The property specialist said it currently expects a significant proportion of agreed sales to continue, but increased uncertainty over the economic outlook will see housing chains tested in the coming weeks.

Zoopla director of research and insight, Richard Donnell, commented: “The scale of the rebound in demand for housing is welcome news for estate agents and developers, but it is also surprising given projections for a sharp rise in unemployment and a major decline in economic growth. 

“The COVID-19 crisis and 50 day lockdown have created an unexpected one-off boost to housing demand. Millions of UK households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting.

“Many households are likely to have re-evaluated what they want from their home. This could well explain the scale of the demand returning to the market. We need to see more supply come to the market to satisfy this demand.”

A consumer survey by Zoopla amongst 2,000 individuals also found that 60% of buyers in the UK are planning to continue with their search for their next home, and that of this cohort, 22% of buyers said that they had not been impacted by COVID-19 and expected to continue unaffected.

The same survey found 37% of buyers suggesting that while they had been impacted to some extent, they were looking to continue with their purchase as soon as possible. By contrast, 41% indicated they had put their plans on hold, citing market uncertainty, loss of income, and diminished confidence in future finances as deterrents.

“The economic impacts of COVID-19 will grow in the coming months and uncertainty is building,” Donnell continued. “The majority of would-be movers plan to continue their search, encouraged by low mortgage rates and continued government support for the economy.

“However, we expect the latest rebound in demand to moderate in the coming weeks as buyers and sellers start to exert greater caution. Further support from the Government can’t be discounted and would help limit the scale of the downside risks.”

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