With the government removing restrictions on the UK housing market, there is clear evidence of enhanced activity as confidence returns to the sector. House buyers, now able to undertake physical viewings and proceed with transactions, as well as investors and institutions, have demonstrated a significant uptick in the housing market.
Real estate consultancy Knight Frank reports that in London, the number of offers accepted exceeded expectations with a 34 per cent increase relative to its five-year average. This is indicative of exceptional pent up demand as the UK property market reopens. The most pronounced evidence alluding to this resurgence is exhibited in the number of prospective buyers which, for London, is 54 per cent, above its five-year average.
Website views alone for properties outside of London have increased 13 per cent above the five-year average in the week ending 6 June.
A difference that had widened before and during the lockdown - between asking prices and achieved prices - has not only halted but is now reduced significantly as the deal velocity returns. With construction mitigated in the first half of this year, and long-term constricted supply in the UK housing market, London house prices have remained resilient. So much so that Knight Frank’s latest report indicates new-instructions to sell in London and County markets are 4 per cent beyond five-year averages in the week to 6th June.
Whilst in June 2019 the average asking price of a home in London was £618,880, as of June 2020 this increased to £628,000. Rightmove’s latest house price index indicates that whilst this is 1.7 per cent lower than before the Coronavirus lockdown, this modest 1.5 per cent increase from last year represents remarkable stability.
The Rightmove report shows clear indications of growing demand with enquiries to estate agents reaching record levels at 40 per cent greater inbound relative to the high levels in March before the lockdown. Whilst the outlook in the short term is unclear, a greater number of offers being accepted in UK property markets merits substantiated optimism. Moreover, with long term price growth forecasts of between 1 - 7 per cent according to Lloyds and EY, and up to 15 per cent on average over the next five years, this is a unique opportunity for investors to participate early in a recovery.
Restrictions on UK property transactions were lifted on 13 May following an eight-week period during which physical viewings ground to a halt and demand remained muted. As the UK emerges from lockdown and the wider impact on the jobs market becomes clearer, this will have a bearing on the performance of the housing market.