The latest figures from HM Revenue & Customs show that approximately 48,450 residential properties were sold in May; a c.50% drop from the same period in 2019.
The impact that the UK lockdown has had on the economy means that we are unlikely to surpass 2019’s monthly sales for quite some time. Zoopla, however, has reported increased interest in the residential property market in recent weeks suggesting that we may see a steady recovery. But for online property searches to translate into sales, there needs to be greater economic stability in H2 of 2020.
In April 2020, the Guardian reported that an estimated £82 billion worth of property transactions were suspended because of the lockdown. But as government restrictions were eased on May 13th, activity in the market slowly restarted in England. Some construction sites and estate agents re-opened and, Zoopla recorded an 88% surge in buyer demand. According to Grainne Gilmore, Head of Research at Zoopla, “this demand had been building through April and May,” and was evidenced by searchers proactively engaging with listed properties and agents with the intent of purchase.
In these high search volumes, Zoopla saw interest re-focused on properties located in rural areas with more outdoor space, indicating that housing priorities are set to change. Remote working (which could be in place for a long time) has meant that many people will have the benefit of little or no commute to centrally located office spaces and this may now impact buying decisions long-term. The move to rural areas could correlate to a short-term decline in interest for properties in commuter zones as well. However, demand for properties in these areas is likely to bounce back relatively quickly because of the convenience and local amenities.
Does this mean the market will recover quickly?
Although there has been an increase in buyer interest, we may not see an immediate and direct correlation to actual sales. It is difficult to gain a sense of whether browsers are ‘window’ shopping or serious buyers. We are still in the early stages of a post-COVID-19 climate and the chances of a second spike remain relatively high, which means there is still a lot of uncertainty. Whilst the UK furlough scheme has been a security net for many, it does have an end date. With the potential for furlough to turn into redundancies in some sectors, it is difficult to determine how many serious pre-COVID purchasers will still be in a position to move to new homes in 2020.
For those that are still in secure employment, there may be a genuine rise in interest, particularly in rural areas. Some businesses have suggested a more permanent work from home strategy, even after lockdown is lifted, but many others are considering the value a physical office provides. Maintaining a strong company culture and interacting with colleagues has been a challenge during lockdown and is generally missed. Long-term remote working will impact the dynamics of any business and so we could see a hybrid of remote and office working. If this style becomes an option, homeowners will be weighing up the combination that works best both personally and professionally; that may mean staying closer in commuter areas.
Whilst there has been a reported surge in interest in property purchases, it remains difficult to determine whether this will translate into transactions. Homeworking in the short-term may be viable but a long-term lifestyle change and relocation may not really be feasible for many of these browsers; having the option to socialise with colleagues and work away from home is likely to remain an attractive option. Either way, whether or not people can actually move is going to be the bigger challenge; the shape of the employment market has historically dictated the strength of the housing market and so for interest to convert to sales, we’d need to see signs of economic stabilization.