UK housing market's post-lockdown bounce 'might run out of steam'

The UK housing market is enjoying a short-term, post-lockdown bounce but there are “worrying signs” this may quickly run out of steam, according to surveyors and estate agents.

In the wake of the property market starting to reopen, the number of people looking to buy a home rebounded in June, as did the number of new properties being listed for sale, according to the latest monthly snapshot from the Royal Institution of Chartered Surveyors (Rics).

Socially-distanced property viewings restarted in England on 13 May and in Northern Ireland and Scotland last month. In Wales, the property market partially reopened on 22 June.

Individual surveyors and agents reported differing fortunes, though many said they were very busy during June. Several reported that there were signs that some potential homebuyers were plotting a move away from their city location to a rural area or smaller town, as people rethink their priorities in the wake of the coronavirus pandemic.

Neil Foster at Foster Maddison in Hexham, Northumberland, said there was evidence of “urban flight and lifestyle change” driving demand; while in Nottingham, Chris Charlton at Savills said they had seen strong demand from “buyers with a London postcode”.

However, Rics said that going forward, house prices were expected to continue to fall.

Its prediction comes two days after the Halifax reported that UK house prices had fallen for the fourth month in a row for the first time since 2010, with the lender saying it was anticipating further modest falls over the summer.

The latest Rics report found that a net balance of 61% of surveyors and estate agents –measuring the difference between those reporting increases and those seeing decreases – said they saw a rise in new buyer enquiries over the month. This was in stark contrast to April and May, when the figures were -7% and –94% respectively.

For the third month in a row, those taking part in the survey reported falling house prices, though the picture in June was “less downbeat” than in May.

“Looking to the next 12 months, respondents now anticipate a flat to marginally negative trend in house price inflation,” said Rics.

In recent weeks many mortgage lenders have tightened their lending rules and withdrawn mortgages catering for those homebuyers who can only manage perhaps a 5% or 10% deposit – prompting claims that first-time buyers were being locked out of the market.

Simon Rubinsohn, the chief economist at Rics, said it had seen sharp rises in its data relating to buyer enquiries and new property listings. But he added: “There are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers and the uncertain macro environment, particularly with regard to the employment picture.”

On 4 July, Leicester went back into lockdown, resulting in most businesses having to shut their doors once again. Andrew York, at local Rics member firm Moore & York, said the market there had been picking up prior to the renewed lockdown. “When will this nightmare end?” he asked.


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