Lock down made purchasing a property virtually impossible.
However, in May we have seen restrictions eased for Estate Agents, Surveyors and Solicitors. Mortgage numbers have increased and this includes products for people with lower deposits.
So is this the return of the housing market?
We have definitely seen an increase in enquiries and demand for independent mortgage advice. However, before getting too carried away, it’s important to monitor industry news, views and facts for key indicators of where the market is going.
In terms of mortgage products, we saw an increase in the number of mortgage products available. We also saw an increase in the number of searches for mortgage products. With finance being a key factor in the housing market, this was obviously good news.
In terms of property, Rightmove reported that homeowner activity had returned to pre-lockdown levels and enquiries had doubled overnight. This is also good news. Demand is another important factor.
Later in the month, Zoopla then went on to report buyer demand surging by 88%. More good news.
Then on the same day, Zoopla also reported that the housing market rebound will be short lived.
Time for a reality check?
History tells us that one of these will be the probable outcome.
Either demand will remain strong, a majority of people will return to work after being furloughed and the money being pumped into the economy will be more than enough to move to recovery followed by a boom.
Alternatively, we have the inevitable recession and people don’t have the job security they thought they had. Unemployment rises, demand reduces and the money injected into the economy simply wasn’t enough.
With the current situation, most people will be thinking the latter. However, as the saying goes, the day is always darkest just before the dawn.
In reality, unknown factors are the effect of the furlough scheme stopping and consumer confidence when things return to a ‘new normal’. We’ll only know more when we get the data later in the year.
Our feeling is that we will see a reasonably strong bounce back in the housing market for the next few months.
Surprisingly, we saw relatively few transactions fall through due to lock down which is an indication of people’s appetite in spite of the circumstances.
Furthermore, summer holidays are restricted (or cancelled) for many people. As a housing transaction is now workable, it could present a good opportunity for some in terms of timing.
If schools open in September and people return to work, this could slow activity as people adjust to a new normal. Timing wise, this will run alongside the inevitable headlines around recession and clearer data on the impact of the furlough scheme ceasing, unemployment levels and consumer confidence.
After this, we will have a clearer idea of what’s going to happen next.
So will there be a crash? Although not impossible, we don’t believe so.
Prices with some transactions may fall back slightly. We’ve seen a few cases where people have tried to re-negotiate prices. On average this has been around the 5 -10% mark. Some have been successful, others haven’t. There are opportunities for buyers and investors alike, but a price reduction is certainly not a given.
We are expecting the rest of the year to be more of what we’ve seen over the last 3 years as a result of Brexit. Relatively flat and a bit ‘stop-start’, but given what’s happened in the world recently, that would be fine with us.
If you are planning on moving or need any mortgage advice, contact us for a FREE, no obligation chat.