03 Aug Impact of coronavirus on property market becomes clearer
As further restrictions are eased, more statistics are emerging on the effect of lockdown on the property market.
Previous forecasts had tended to be pessimistic; however, the reality has proved to be not quite as gloomy.
Revised estimates more optimistic
In April, property website Zoopla predicted more than 400,000 sales would be delayed due to the property market closure between March and May. It also estimated a 30% decline in sales.
However, based on recent data, Zoopla has revised these figures, and its latest forecast estimates a 15% decline in sales. Overall, it now predicts 124,000 sales will be lost during 2020 because of the forced property market closure.
How much has been lost?
Property insight company, TwentyEA has used sophisticated data science to map the market effect of coronavirus. It used previous levels of activity as a baseline for its research.
For instance, analysis shows that lockdown resulted in a considerable drop in new listings coming onto the market and sales agreed.
- Key data analysis has revealed that there was a loss of 285,000 in new instructions, equating to a 34% decrease.
- There was also a loss of 238,000 sales agreed, meaning a 36% drop.
- Meanwhile, figures show that 59,000 exchanges were lost, effectively a 16% fall in transactions.
A healthy rebound followed
However, further analysis from TwentyEA reveals that despite the fall in exchanges during the lockdown period, this didn’t last too long and there has been a significant rebound since markets reopened.
NAEA Propertymark’s June Housing Report supports this. This report showed that the average number of sales agreed was 10 for every estate agent branch in June, whereas it was only five per branch in May.
“It’s positive to see the market continuing to boom after the Government reopened the property market in May. Usually we’d expect to see a lull in activity during the summer months, however, with estate agents following new social distancing protocols and both demand and sales soaring, it seems we’re in for a busy summer,” said Mark Hayward, chief executive of NAEA Propertymark.
Will this property market activity be sustained?
Since the property market reopened, Zoopla has also reported that new sales agreed are 28% above pre-lockdown levels, though they were still down 20% annually at the end of June.
“Covid-19 and the lockdown have shifted the dynamics of supply and demand across the housing market. The staggered reopening of housing markets across countries and the added impetus from the Stamp Duty holiday mean we expect buyer demand and new sales volumes to hold at current levels over the next two months. The net result will be continued support for house price growth at current levels over the second half of the year. We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021,” commented Richard Donnell, research and insight director at Zoopla.
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