The number of sales received for registration and mortgage offers accepted in March plummeted as the UK prepared itself for a new normal in a bid to combat the spread of Covid-19.
According to HM Land Registry’s ‘Price Paid’ data for March, sales received had fallen 29 per cent from 78,243 in February to 54,785. March’s total had almost halved when compared with 95,982 sales received for registration in January.
The 40,964 freehold properties received for registration represented a 38 per cent decrease on February 2019. Similarly, new build property registrations had fallen by 39 per cent to 8,019.
At the end of last week, Bank of England data indicated that approvals for mortgages in March had declined by 20%, the most significant decline since 2013. This included house purchase approvals falling by 24 per cent to 56,200 and approvals for remortgages falling by a fifth to 42,600.
Conversely, Nationwide’s ‘House Price Index’ for April suggests that the impact of the pandemic is not reflected in their latest index after house price growth continued to increase at its fastest rate since February 2017.
The average price for a UK property now stands at £222,915, an annual change of 3.7 per cent and monthly increase of 0.7 per cent. As mortgage applications relate to pre-lockdown applications, this data set may take longer to reflect an accurate picture of how the virus is affecting house prices.
Richard Pike, Phoebus Software sales and marketing director, commented:
“After the start we had to 2020 the whole market was buoyant and looking forward to the potential of a return to pre-financial crisis activity. No-one could have predicted what came next and, as we can see from the March figures, the effect of the coronavirus outbreak started to be felt almost as soon as the lockdown was implemented.
“Despite the fact that many of the housing transactions, being reported in these figures, were in the pipeline up to three months earlier, it is evident that the lockdown caused some to be stalled. The hope is that the transactions that are waiting in the wings will be completed once the crisis is over, but we have to be prepared for some to fall by the wayside. We are likely to see an element of caution creep back into the market and fears over affordability, with many people seeing a real knock to their finances, cannot be ignored.
“Nonetheless, we are hearing more positive comments from the government that it is planning an easing of the current measures. Whilst, in our own market, we are already hearing brokers reporting an increase in new-build enquiries. So, perhaps, this heralds the return of at least a little confidence.”
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:
“Annual house price growth increased to 3.7% in April, up from 3% in March – the fastest pace since February 2017 (when annual growth was 4.5%). There have been month-on-month gains for the last seven months in a row, after taking account of seasonal effects.
“It’s important to note that the impact of the pandemic is not fully captured in this month’s figures. This is because our index is constructed using mortgage approval data, and there is a lag between mortgage applications being submitted and approved.
“Indeed, c80% of cases in the April sample relate to mortgage applications that commenced prior to the lock-down, and hence before the full extent of the impact of the pandemic became clear.
“In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.
“But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period.
“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months. Our ability to produce the index in the months ahead will depend on there being sufficient transactions which are representative of the wider housing market.
“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.
“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.
“But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.
“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”
