We talk to Richard Donnell, director of research and insight at Zoopla, about where the market is right now and what he expects to happen in the months ahead.
Q. Richard, is the housing market now open across the UK?
A. Yes. For the first time since March, the housing market is largely open, with only some restrictions remaining. This means that most buyers and sellers in all parts of the UK can now proceed with their moving plans.
Q. What does that mean for activity levels?
A. Activity in the market has risen strongly. Buyer demand across the UK is now 46% higher than pre-lockdown levels, a large jump given the wider economic landscape.
One day after the market opened in Wales on 22 June, we saw buyer demand there bounce up by 41%. So the market is busy with buyers progressing with purchases that they put on hold during lockdown.
We may also be seeing a new cohort of buyers who weren’t planning to move before lockdown, but who are now reviewing where and how they are living, and deciding to make a move.
This is now feeding into higher sales levels, with the number of home sales agreed up 4% compared to 1 March.
In the rental market, we have also seen tenant demand and tenancies agreed rise strongly over the last seven weeks. Rental activity is now higher than at this stage of the year in 2019 and 2018.
Q. Demand has risen, but what about the supply of homes for sale and for rent?
A. Although the number of home listings for sale and rent have risen in recent months, it is still down 15% compared to this point last year.
This lower level of supply, coupled with strong levels of demand, is underpinning pricing at present. Would-be sellers who enter the market now will be able to take advantage of this stronger demand.
Q. What’s next for the housing market?
A. We expect demand levels to remain strong in the coming months, although there will likely be some moderation.
In terms of house prices, we expect the annual rate of house price growth to remain around 2-3% until approximately the end of September 2020.
However, the cloudier outlook for the economy may start to pull house prices down towards the end of the year and into 2021.
In the rental market, rents remain relatively steady with year-on-year growth at around 1.5%. But rental growth is lower in London as more supply has come onto the market with landlords of short-let properties now looking to agree longer rental periods, and entering into the long-let market.
Q. What other factors are likely to influence the market in the coming months?
A. In the sales market, the availability of mortgage finance, especially for those who have smaller deposits, will have a bearing on the market.
Likewise, unemployment levels are set to rise, which could put a further dampener on demand, reflecting the more challenging economic conditions throughout the country.
However, the government has pushed for strong measures to support both the housing market (such as mortgage payment holidays) and the wider economy. More support for the market from the government can’t be ruled out.