The report issued by HMRC this morning provides the total number of completed residential property transactions last month and is seen by many in the property industry as a reliable bellwether of the health of the market. The figures indicate that there were 46,440 completions on a seasonally adjusted basis in April, a fall of 46.1 percent when compared with the 86,200 homes sold in March and a decrease of 53.4 percent against the 99,760 properties sold in April 2019.
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On the one hand, these are significant movements which clearly evidence the impact that the lockdown measures have had on the UK housing market.
From a different perspective, however, when viewed on a month on month comparative basis these figures still suggest that despite entire swathes of the industry working remotely, lenders, mortgage brokers, surveyors, solicitors and estate agents were still able to process and complete a substantial number of sales that were in the pipeline.
Given the level of complexities involved in the property transaction process, that’s no mean feat. It also somewhat evidences the number of buyers who were happy to complete on their purchase, despite the wider economic outlook.
Marc von Grundherr, director of London lettings and estate agency Benham and Reeves commented: “The numbers painted here are stark, yet surprisingly positive in the sense that we were expecting a cryogenic market freeze during lockdown, but some homebuyers either didn’t get the memo or stuck to their guns regardless.”
“Of course, it remains to be seen what the longer-term effects of COVID-19 will be on transactions. The bottom line impact on any area of the market often takes some months of backtracked reporting to materialise and there’s no doubt that this will be the case where transactional decline is concerned.”
Marc continued: “The good news is that buyers are back in force and market activity will recover as a result, albeit at a pace that current procedures allow.”
Yet, for all the early indicators of positive sentiment following Housing Secretary Robert Jenrick’s announcement that estate agents, surveyors and many others in the property industry could return to work last week, are today’s numbers our first sobering glimpse of what’s next for the housing market?
“We expect May’s data to be similar to this, if not worse. We need to get the market fully open and working again as quickly as possible if we are to limit the damage to the economy as a whole and the property sector specifically,” said Joshua Elash, director of property lender MT Finance.
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Joshua continued: “The April figures show just how dramatically the lockdown has impacted the property market with residential transactions hugely suppressed.
“At a time when the Government is spending at an unprecedented rate, the corresponding drop in stamp duty revenues is going to add further to the economic fall-out from our response to Covid-19.”
Former RICS residential chairman Jeremy Leaf suggested: “Of course, it is always transactions rather than more volatile prices which are a better measure of housing market strength at this particular time.
“This data comes at a particularly interesting point, just after the Covid-19 bombshell hit, so one of the first to reliably assess the damage. This has been significant with probably worse to come, while new normal values are established.”
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Jeremy added: “On a more positive note, activity has picked up considerably since we returned to work, at least in part, although it will take several months for interest to build to offers and completions and be reflected in these or similar reports.”
Andrew Montlake, MD of Coreco Mortgage Brokers concurs, having also witnessed an initial rise in client enquiries since lockdown measures were reduced last week.
Andrew observed: “It’s no surprise that we have seen a steep drop in property transactions compared to this time last year and last month, but what is more interesting is the fact that we are starting to see reports of increased activity once more.
“The property market relies very much on general sentiment and the opening up of the property market by the Government once more is a tentative, yet positive step.
“What we do know is that after spending time looking at the same four walls for several weeks, as well as a likely increase in flexibility of working patterns going forward, many are hitting the property portals again and looking at moving.”
Andrew cautioned: “Whether this translates into actual transaction levels remains to be seen, but with low interest rates and lenders keen to lend once more we should see transaction levels increase over the coming months.”
Of course, these are only very early indicators of how would-be movers are reacting. Much of the forward direction of travel for the property market will be dependent on far more regionalised economic factors and the localised balance of supply and demand.
Doubtless, there will be varying degrees of traction and inaction in the months to come; the market will very likely become polarised, not just on a geographical basis but also between those who still feel comfortable enough to move home due to certainty of employment or income, and those who are unable to proceed given that their own circumstances are uncertain or have changed.
As the old saying goes, “perception is reality”. It’s this factor that’s most likely to sway consumer confidence one way or the other in bricks and mortar for the foreseeable future.
Follow Louisa on Twitter: @louisafletcher
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