Another solid piece from Zoopla/Hometrack, looking at the state of play in the housing market. Their research suggests a huge decline in transactions in April, but with some pick up in demand towards the end of the month.
Fall in demand bottoms out and starts to rise slowly
The browsing of property online and the demand forhomes fell sharply over March with the greatest decline before the lockdown (Fig. 2). The fall in demand and browsing bottomed out at the start of April and has started to increase slowly off a low base. Browsing levels have recovered to within 35% of the levels at the start of March while demand is still 60% lower.
Bounce back in northern cities
Cities in northern England have recorded below average falls in demand over the recent downturn. In addition, they have recorded some of the stronger increases in demand over recent weeks, notably Manchester, Liverpool and Leeds. These are all cities where 2020 started strongly and housing affordability remains attractive. These cities could see a faster
bounce-back when restrictions lift although most cities have recorded an improvement in recent weeks.
At the other end of the spectrum, higher value and high growth cities such as Cambridge, Edinburgh and Southampton have recorded no material change to underlying levels of demand over the last two weeks.
A 50% drop in housing sales projected for 2020
Our current estimate is that we will see a 50% drop in completed housing sales in 2020 compared to 2019. The historic low for housing sales in a single month was 42,000 in January 2008. We expect sales volumes to remain below this level until September 2020. This will result in transaction completed being 50% lower than last year.
The positive news is that the total amount of housing for sale is just 4% lower than the start of March as vendors maintain listings so there is no mass withdrawal of homes for, so there is still plenty of choice for those looking.
Outlook for demand remains uncertain
While demand for housing has started to increase, there is a question mark over the speed and trajectory of a recovery towards normal levels in the months ahead. Recent survey data from IPSOS Mori shows the over-riding concern of consumers is the COVID-19 crisis. Economic concerns are a distant number two and fears over employment down in eighth, although rising. Low mortgage rates and major Government support are a positive but demand for housing in the coming months may be more seriously challenged by a deteriorating economic outlook that directly impacts employment levels for homeowners.
What about the impact on house prices in 2020?
We will have a clearer view on the price impact once restrictions start to lift and we get a flow of new sales agreed and pricing evidence. We will be able to track this and changes in the level of pricing for new and existing sales inventory to get an early view on the development of pricing.
All content from Zoopla/Hometrack - original article may be found here