UK housing market rebound has been faster than its decline post-Covid

A recent report shows that housing market performance has fared than expected over recent months. Can we expect this to continue as the government’s aid schemes come to an end?

Property market specialist TwentyEA has compiled a series of data showing how the Covid-19 outbreak has affected UK property. After the market ground to a halt, many expected buyers and sellers to take a cautious “wait and see” approach. However, both TwentyEA’s data and the most recent national house price indices show that the sector is recovering quickly.

TwentyEA’s research shows, unsurprisingly, that new listings plummeted once lockdown was in place. Numbers went from around 5,000 to 6,000 new instructions per day, to less than 1,000. This lasted for several weeks, until the government eased restrictions around 13th May.

After this point, listings swiftly began to climb back to previous levels. The report says: “Based on pre- and post-Covid volumes, we would have expected to see around 837,000 new properties listed, instead, we saw 552,000. This is a loss of 285,000 or a 34% drop in new instructions.”

But with the numbers continuing to spike in an upward direction, provided the momentum stays in place, new listing levels are expected to continue to rise. In fact, the start of July saw more new listings than the beginning of February.

Source: TwentyEA

What about property exchanges?

In terms of property exchanges, there was actually less of a marked decline than seen above. After a short dip, exchanges recovered very quickly, says the report.

“This is where the story starts to a look a little more positive. Whilst there is a significant decline in exchanges during the lockdown period, the trough didn’t last as long and consequently had a far lesser impact.”

In terms of how performance tallied up with reality, TwentyEA says there was only a 16% drop in transactions. When looking at pre- and post-coronavirus levels, the firm would have expected around 365,000 exchanges to take place. The final number was actually 306,000.

Source: TwentyEA

Further recovery of the housing market

In the weeks since this data was compiled, a spike in activity is likely to have led to a bigger leap in exchanges. Numerous reports from agents, conveyancers and other industry professionals back up the swift return to the market from both buyers and sellers.

According to TwentyEA, while many people across the UK held off from property transactions during the height of lockdown, this wasn’t the case for everyone. And those already processing sales continued to progress “in much greater numbers” than expected.

There’s further good news from the latest Halifax house price index, published this week. It recorded record annual house price growth of 5.2% in August, and a 1.6% rise from the previous month. The surge was fuelled by a combination of factors, says Halifax managing director Russell Galley. The release of pent-up demand, a drive to relocate or upsize among buyers, and the stamp duty cut have all had an impact.

However, with the furlough scheme coming to an end in the autumn, the pace could slow slightly. Some economists predict a rise in unemployment, which could affect real estate. In the medium term, this could also impact house price growth.

While the bank warns this level of growth in house prices is unlikely to be sustained, it certainly shows the degree of optimism currently attached to the UK housing market. The mortgage market, while still slightly restricted, is also fairly favourable to borrowers right now. Low interest rates combined with a stamp duty holiday for sub-£500,000 properties means big savings for many buyers and homeowners.