Around 373,000 housing property deals worth £82 bn €93 bn) have been put on hold due to the Covid-19 pandemic, according to the latest UK Cities House Price Index released by property portal Zoopla.
The majority of the sales were agreed between November 2019 and February 2020, and would have been set to complete between April and June.
Aside from the 373,000 sales suspended in the pipeline, which may complete later in the year, a handful of sales are still being progressed, largely based on viewings and progression of sales that took place ahead of the lockdown. New sales agreed are running at a tenth of the levels recorded in early March, Zoopla said.
The rate fall-throughs peaked on 23rd March, the day of the lockdown, and has fallen back as the volume of new sales being agreed declines. The outlook for sales progression depends upon how long the restrictions remain in place, the scale of the economic impact, and how this impacts would-be buyers and their ability to proceed with sales.
The rise and fall of housing demand since Covid-19 hit
The demand for housing fell by 70% between the start of March and the week ending March 29, with the greatest decline recorded ahead of the lockdown. The drop in demand bottomed out in early April and has since started to improve slowly off a low base. Despite a steady increase in buyers looking for homes, demand still remains 60% below the levels recorded at the start of March.
Zoopla forecasts that completed sales will be 50% lower in 2020 than 2019, allowing for a proportion of stalled sales to complete and with a delay to sales that would have progressed. The positive news is that the total number of properties for sale is just 4% lower than levels registered at the start of March, as vendors maintain listings, indicating no mass withdrawal. This is critical to ensuring a faster rebound to full market health once coronavirus restrictions are lifted, Zoopla said.
It is too early to forecast the impact of coronavirus on house price performance in 2020, but the Cities Index registered the lowest monthly growth for over a year at +0.1% - just a third of the monthly growth rate recorded in January and February.
Commenting on the findings of the latest UK Cities House Price Index, Richard Donnell, director of Research & Insight, said: ‘Without doubt, once the coronavirus restrictions are relaxed, we should expect the release of demand that has been building since Brexit and political uncertainty destabilised market sentiment. That said, the case for a stamp duty holiday to support a resumption of market activity is clear and a high proportion of savings are likely to be spent, further stimulating economic activity.’
He added: ‘It is too early to register any pricing impact given new sales volumes are 90% down on the start of March. Demand is rising but there is a long way to go until we see a return to typical levels of market activity.’