In the current climate, it’s probably difficult to remember the so-called ‘Boris Bounce’ at the start of the year where the property market was experiencing a new boost in confidence in the wake of the general election. However, recent data has revealed that that the market was still feeling the effects of the election aftermath as recently as last month - before the COVID-19 crisis reached pandemic stage.
According to data from the National Association of Estate Agents (NAEA), property sales in the UK reached a six-month high in February and continued to see a year-on-year increase since February 2018. In February, the NAEA’s members reported that they had an average of nine sales per month - this is the highest number of sales that the NAEA has reported since August of last year. The data also suggested that we were set for a spring surge in the property market, with many homebuyers and buy to let investors actively looking for a property before the country went into lockdown. Each member branch had an average of 322 house hunters - this was a 28% increase from the previous year. Additionally, the NAEA’s members reported that the number of available properties per branch had increased slightly between January and February - going from an average of 38 properties per branch, to 39 per branch.
While this is very encouraging, the country - like many other nations across the world - has found itself in an extraordinary situation in the form of the COVID-19 pandemic, which has forced the entire country to go into lockdown. This has essentially meant that the majority of the population has had to go into ‘survival mode’ and activities like purchasing houses is taking longer while the population is getting used to their new circumstances. Needless to say, the housing market is likely to slow down as a result of this and the data for March will be a far cry from that of February. However, what’s important now is how the market will recover once the crisis eases off.
According to a report conducted by Savills, it is suggested that the COVID-19 crisis will only negatively affect the property market in the short term and the pandemic will have a more limited impact on the economy, compared to the economic crash back in 2008. According to the report by Savills, property transactions will see the biggest impact over the next three months due to the restrictions on leaving homes and the limitations of conveyancing and mortgage activity. However, this will only suppress the demand until the market can resume to normal activity and we are likely to see a surge in demand once the uncertainty has passed. The restrictions on movement and working has also put constraints on the construction industry. While a number of construction workers have tried to carry on as normal, the new social distancing rules has meant that a number of sites have had to cease work for the time being and will have to look at other activities to continue cash flow. This could potentially delay some projects - however, most sites are continuing to operate for as long as they can.
The strong performance of the property market has meant that it’s in good stead to recover once the panic surrounding CCOVID19 has passed, it will just have to weather the storm over the next couple of months.
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