Property Market Bounce Back Should Be Treated With Caution
Since the lockdown in March, the property market has seen dramatic changes; Rightmove reported a fall of 40% in visitors at the time of the lockdown, estate agents having to offer virtual tours and house sale dropping by more than half in April, compared to March.
However, following the relaxation in restrictions, allowing property viewings and for sales and purchases to resume, Zoopla has reported that buyer demand has increased by 88%.
This may seem like good news for all involved in the property sector, however, despite the rise in buyer demand, actual sales figures show a different story, as they remain sluggish. This has caused many to be weary of the bounce back figures.
The lockdown will have changed people’s way of life in many respects, with many of those having an effect of the market. Whilst people have been locked in their homes with their loved ones, they may have longed of more space, resulting in a daydream searches on property sites, however, for many the reality may be very different.
For thousands of people throughout the country there will be economic uncertainty for the months to come. The amount of people claiming unemployment benefits rose by 70% in April and over 8 million people have been placed on furlough, to help limit a surge in unemployment.
This leaves millions unsure what the future holds and whether they will be returning to a role or even be able to find employment. This will cause many to stay put with a wait and see approach, before making the decision to buy or sell their home.
“Many households are likely to have re-evaluated what they want from their home. This could well explain the scale of the demand returning to the market,” said Richard Donnell, director of research at Zoopla.
With the increase in unemployment and lower earnings, there will be many who will be unable to meet the current borrowing criteria, again stifling the market.
People are however looking to take the time they are at home to re-evaluate the way they live and make better use of the homes they have. Retailers who sell DIY products have seen dramatic surges in sales since the lockdown, as well as A&E departments seeing increases in DIY related injuries.
One area of the housing market that currently does not appear to be affected however is the rental sector. Rightmove has reported that on the 18 May, only 5 days after the property market reopened, the property website saw the highest level of rental demand in a single day.
As with the increase in buyer demand on property sales website however, the increase in rental demand is being treated with caution:
“A week’s worth of data should only be taken as an early indication of activity, but it’s certainly encouraging,” said Miles Shipside, from Rightmove.