Housing demand has risen by 88% following the reopening of the property market in May. This is according to our latest monthly UK Cities House Price Index Report.
This indicates that buyer demand has risen above levels seen before the coronavirus lockdown began in March.Download the full report
The number of property sales agreed is also steadily rising since the market reopened. But it will take some time for these numbers to rise significantly.
This is because it typically takes two months between a buyer starting their home search and a sale being agreed. It can even take a further three months to complete the transaction.
There has been no increase in housing demand in Scotland, Wales or Northern Ireland. This is because the housing markets in these countries have not yet reopened. Nicola Sturgeon, First Minister of Scotland, has indicated that the Scottish housing market could reopen from 18 June.
The reason behind the post-COVID bounce
The post-COVID bounce may be due to the time people have been spending in their homes.
Richard Donnell, director of research and insight at Zoopla, says:
“The COVID crisis and 50 day lockdown has created an unexpected one-off boost to housing demand.
Millions of UK households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting.
Many households are likely to have re-evaluatedwhat they want from their home. This could well explain the scale of the demand returning to the market.”
So, where has demand been focused?
Two English coastal cities have seen the largest spike in demand after the market opened, compared to levels in February.
Demand in Portsmouth and Southampton is more than 40% higher than pre-coronavirus levels. Demand has also risen strongly in Newcastle, Oxford and Leeds.
What has happened to house prices?
There was no change in average house prices since March across the 20 cities included in our Cities Index Report.
This indicates that buyer demand has risen above levels seen before the coronavirus lockdown began in March.
This marks the lowest monthly rise since January 2019.
On an annual basis (the change in prices since April last year), prices were up by 1.9%.
The annual change in house prices dipped from 2% in March to 1.9% in April.
Nottingham continues to lead the way in terms of house price growth, with average prices up by 4.1% in May.
This is closely followed by Leicester, with prices up by 4% in May.
Average prices dipped in Oxford (-0.8%) and in Aberdeen (-1.7%).
What’s the outlook for the housing market?
The extension of the mortgage payment holiday offers further support for homeowners struggling financially.
This struggle may come from having been placed on furlough. Or because homeowners are facing employment uncertainty.
We expect the slow rate of growth to become more marked over the summer.
But a clearer picture will emerge when we see more sales complete.
We also have to consider any future government support for the economy or for the housing market, such as a stamp duty holiday.
Market activity remains positive overall
Around 60% of potential movers we spoke to said they’ll continue with their property plans.
While the majority press ahead, 40% of potential movers are putting plans on hold given the uncertain outlook for the economy.
Top three takeaways
1. Demand for homes in England rose by 88% after the housing market reopened in England.
2. Around 60% of would-be movers across England say they plan to go ahead with their property plans. Although 40% have put their plans on hold because of COVID and the uncertain outlook.
3. The number of property sales agreed is also steadily rising since the market reopened. But it will take some time for these numbers to rise significantly.