We talk to Gráinne Gilmore, head of research at Zoopla, for the latest insight on the housing market during the coronavirus lockdown.
Q. Gráinne, what’s happening in the housing market right now?
A. The answer to this question depends on where you’re based in the UK.
In England, the reopening of the market on 13 March led to a staggering 88% surge in pent-up demand.
Homebuyers and tenants (who could not progress their next move during lockdown), contacted agents to restart moving plans as soon as the market reopened.
We’re seeing similar demand building in Northern Ireland, Scotland and Wales, where the housing markets are still closed.
You should expect a similar surge once agents in these countries can operate fully. This may only be weeks away for the Scottish market, as Nicola Sturgeon has announced that the market in Scotland will reopen in June. The exact date has not yet been revealed.
Q. Where has demand grown the most?
A. As shown in our latest monthly UK Cities House Price Index Report, the strongest rise in demand is in the English coastal cities of Portsmouth and Southampton and Liverpool.
There’s also been strong growth in demand in other key cities such as Newcastle, Oxford and Leeds.
Q. Has COVID-19 influenced buyer behaviour?
As we emerge slowly from lockdown, millions of UK households may be reviewing their housing priorities after spending so much time at home. We refer to this as the “post-COVID bounce.”
People might have realised their need for a more spacious home or a home with a garden.
With people working from home more in the future, the opportunity to move to another area (particularly those further away from central cities) has emerged.
The more rural areas which have seen strong rises in demand include Monmouthshire in Wales, Aberdeenshire and Devon.
Q. Do you think the market will return to business as usual?
A. Demand levels in England are slowly returning to business as usual.
But in other parts of the UK, things are not back to pre-pandemic normal.
Unemployment levels, average earnings and consumer sentiment (how optimistic consumers feel about their finances), all affect what happens in the sales market.
These factors are all likely to change as the economy feels the impact of coronavirus.
Access to mortgages for homebuyers will also remain key in keeping the market moving.
Much will depend on the availability of mortgages for those who do not have large deposits in the coming months.
While the government has already extended mortgage payment holidays, it could also take further action to support the economy or the housing market in the future.
Q. What about the rental market?
A. Demand levels in the rental market have surged in recent weeks.
These levels could remain higher than usual. This is because when there’s uncertainty in the sales market, there generally tends to be a corresponding rise in people looking for rented accommodation.
This could be in search of a stop-gap between selling and buying. Or it could be first-time buyers staying in rented accommodation for longer while uncertainties in the sales market play out.
Q. What do you think is going to happen to house prices?
A. House prices are currently up around 2.4%. But the economic landscape indicates that there may be some downward pressure on this level of growth.
It’s still early days, as initial sales are being agreed just after the market opening in England.
Our data will start to give us an indication of whether people selling their homes are willing to accept lower prices.
In some cases, sellers may be in no rush to sell. This means there could be an impact on transaction levels. We currently expect these to be around 50% lower than the total number of transactions seen last year.
Q. What’s the 2020 forecast for the housing market?
A. The extension of the mortgage payment holiday offers further support for homeowners struggling financially during coronavirus.
This could be due to being placed on furlough or facing unemployment.
We expect the slow rate of growth to become more marked over the summer, but we cannot predict anything with the current uncertainties.
A clearer picture will emerge when we see more sales complete.
Thank you, Grainne.