In December 2019, the year 2020 was pinned to be a new decade of fresh beginnings. The UK had voted for a Conservative government and Brexit was formally put on a 12-month countdown. Fast-forward to March 2020 and the outlook was totally different. The global pandemic finally took hold and the UK was officially in lockdown 23rd March and the housing market, like most of the UK’s infrastructure, had to down tools.
At the time it was uncertain how long the lockdown would be in effect. Therefore, the government drew up temporary guidelines for the housing market on what house buyers and sellers could and could not do during this time. Luckily the UK’s lockdown restrictions started to ease from May 13th and the housing market quickly sprung into action.
But with a stronger start to 2020 how did Q2 fair for the housing market? While not all the data can be analysed as of yet, April 2020, as expected, took a significant dip. The UK house price index for April 2020 noted: “UK house prices rose by 2.6% in the year to April 2020, down from 3.5% in March 2020. On a non-seasonally adjusted basis, average house prices in the UK fell by 0.2% between March 2020 and April 2020, compared with a rise of 0.7% during the same period a year earlier (March 2019 and April 2019).
The UK Property Transactions Statistics for April 2020 showed that on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 41,960. This is 56.9% lower than a year ago. Between March 2020 and April 2020, transactions fell by 55.5%.”
Contrary to a bleak slump in prices during April Nationwide published that Q2, on a whole, saw modest annual price growth across most regions. Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “All UK regions saw modest annual price growth of between 0% and 5% in Q2 as a whole (i.e. taking April, May and June together and comparing with the same period of 2019). The North West was the strongest performing region, with annual price growth picking up slightly to 4.8%.”
This YoY growth could be attributed to the fact that in 2019 many homeowners were uncertain about moving home while Brexit negotiations were making little progress and there was a lack of confidence in the current PM.
Mid-Q2 lockdown restrictions were eased and immediately online real estate portals and property websites reported huge spikes in engagement as people eagerly put their homes up for sale and keen house buyers looked to snap up a post-COVID property move. In July Rightmove reported:
- 44% of new listings that came up for sale in the first month after the English market opened on 13th May have already been marked as sale agreed, compared to 34% for the equivalent dates last year
- We’ve seen a further boost to market activity – and especially for first-time buyers – with more low deposit mortgages available for up to 90% of the purchase price
- Average asking prices are now 2.4% higher than in March pre-lockdown
While many experts cannot predict for certain for how long the post-COVID-19 mini housing boom will continue, it is hoped that with the temporary Stamp Duty Land Tax threshold being extended the market will continue to thrive. Only time will tell what impact the UK’s recession as well as whether the UK will crash out of Brexit with a deal or no deal, what these two factors will have on the UK’s economic recovery long term.