In April, demand for housing in the north of England climbed higher than anywhere in the country. And these cities are expected to bounce back faster in 2020.
Over recent weeks, prospective property buyers have begun to resume their searches across the UK housing market. While the sector is in a state of suspension right now thanks to the coronavirus lockdown, news that we may be past the peak is welcome to many in the industry.
Between the beginning of March and 29th March, housing demand unsurprisingly plummeted by 70%, according to Zoopla. Many previously agreed sales were put on hold, to the value of around £82bn worth of property. New sales agreed fell by around 90% compared to the beginning of March. However, the recent uptick is a sign that life and confidence is already making a comeback.
Return to progress in the north
As always, the UK housing market is somewhat polarised. Many areas with higher average house prices are currently experiencing lower demand levels, including Cambridge, Edinburgh and Southampton.
However, some of the major cities in the north of England are bucking the trend. Zoopla’s latest Cities House Price Index shows that buyer demand in Manchester, Liverpool and Leeds is above the UK average. Over the past two weeks, these cities have also seen the most rapid improvement.
The report states that these areas “could see a faster bounce-back when restrictions lift”.
In spite of a decline in activity levels, says Zoopla, demand is still there. Many parts of the country started the year “with momentum”, says the report, particularly regional cities although London also saw a rebound. It is in regional areas, though, where rising employment levels and affordability make a big difference.
“Home builders are reporting clear pick up in the pace of new orders, as further evidence emerges of demand working its way around the current restrictions. Builders could attract a high share of buyer demand when restrictions first lift.”
Other areas performing particularly strongly in terms of demand are Aberdeen, Newcastle and Portsmouth.
Will things change after lockdown?
The Zoopla report also looks at the idea that we could see new trends emerging in the housing market. With people spending more time in their homes, and thousands more people working from home than ever before, people could have new expectations. For some, it could spur a house move or even a hunt for an entirely new location.
“Many people will have spent a prolonged period in their homes over the last month and a half – with some looking at a more prolonged period in some instances. Some people working from home may be considering doing this more often, so considering extra space or locating further afield.”
The report adds: “There will also be those simply looking to make their next move or seeing an opportunity to try and find a bargain.”
While Zoopla’s focus is on homeowners, the same can be said for private tenants. Renters may be keen to look for a place with more space or outside space, even if it is communal. Internet connectivity will also be more vital than ever. For landlords and property investors, this is a key aspect to consider. Looking at these factors could be a good way to secure more long-term tenants.
The impact of coronavirus on UK house prices
Due to a lack of activity in the market in the short-term, there may not be enough data available to judge house prices. Many sectors and parts of the housing market have already begun to move again, however, so transactions are expected to begin to pick back up.
The mortgage market is reopening and more viewings and even valuations are being done remotely using technology. The conveyancing process is also more digital now, while construction workers are also going back to work. Further to this, as lockdown restrictions begin to ease, pent up demand in the market will be released. Those transactions that had been on hold are likely to push ahead.
In the year to March 2020, house prices in the UK increased by an average 2.1%. When looking at the UK’s cities, the star performers were similar to those that are now regaining buyer demand.
Nottingham came out top with a 4.1% house price rise between March 2019 and March 2020. After this, Leicester (3.9%), Manchester (3.4%), Edinburgh (3.2%), Leeds (3.1%), Liverpool (2.6%) and Birmingham (2.6%) all achieved well above average house price rises.
Zoopla says: “We will have a clearer view on the price impact once restrictions start to lift and we get a flow of new sales agreed and pricing evidence. We will be able to track this and changes in the level of pricing for new and existing sales inventory to get an early view on the development of pricing.”
