Will the post-lockdown bounce back in Great Britain real estate sustain itself?
With real estate unexpectedly allowed to open on May 13, following government-issued guidance on how property transactions can safely proceed, an immediate spike in activity was seen by the two foremost property portals in Britain—Rightmove and Zoopla.
Rightmove data revealed that pent-up demand translated into the market’s best week outside of London with buyers flooding back after lockdown. Since the market opened, Rightmove had 5.2 million site visits, 4% higher than the same period in 2019. The average asking price of homes coming onto the market was up by nearly 2% to $425,000 compared to March, before the lockdown was imposed.
A Resilient Market
The statistics indicate far more resilience in the market than had been expected with no signs of panic selling or even a significant drop in prices. Rightmove recorded 10 of their busiest traffic days in June and browsing led to an increase of 40% over levels seen in March with consumers emailing or calling agents from the site. Compared to last year, new sales were down 94% when the market was closed but improved to being down by just 36% for the three weeks after the market opened.
Rightmove also found that buyers are agreeing to pay prices closer to the asking price than at the beginning of the year. In the first three weeks after lockdown, offers were being accepted, on average, at 97.7% of the last advertised price. Completed data from the Land Registry Office for February 2020 showed an average price of 96.6% were accepted at the last advertised price. This indicates that sales after the market opened in May are stable and on a slight upward trend.
New Would-Be Buyers
Zoopla reports a similar increase in activity with average asking prices on agreed sales in June 2020 up 6% for from June 2019. They report that the rebound in housing demand is not solely due to returning pent-up demand, but COVID-19 has brought a new group of would-be buyers to the market.
A recent Dataloft Homemover survey revealed that just under half of buyers’ requirements have changed since lockdown. Some 30% of buyers said that a garden has become much more important. Space to work from home and internet speeds also increased in importance reflecting on the expectation that working from home will become more regular.
London Slow to Recover
Sales in London have been slow to recover and, in June, were still 25% lower than March 2020. The average asking price discount during lockdown was 6.5%—reduced to 5.5% by mid-June. Predictions are that London prices will fall by 5% in prime markets this year, but it would appear as this decline is already priced in.
The bounce back may be short-lived. Richard Donnell, director of research at Zoopla commented, “No one truly knows what the economic impact of COVID-19 is going to be. The housing market is purely an expression of the economy and we need to be cautious about predicting activity in the second half of the year.”
Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa.