Coronavirus halts housing market: what's the best advice? March 2020

by:

Andrew Boast

Updated:

01/04/2020

Read by:

370

4 min read

Find out the latest housing market advice surrouding the Coronavirus emergency from SAM Conveyancing

The global pandemic has thrown a curved ball of epic proportions at all world markets.

The primary purpose of this month's housing market update is to direct you to our coronavirus advice article for home buyers and sellers, which we're updating regularly as information is released to us from the key regulators and industry bodies.

Our daily interactions with our colleagues and service providers means we're quickly briefed about matters 'on the ground', particularly with regard to our RICS surveyors for example.

Please therefore bookmark our article and return to it as often as you need and if you have information which you feel would be useful to spread to our readership, please contact us by email or telephone: whilst our employees are now working from home, we intend to stay open to help our clients as much as possible.

We also have advice for businesses looking to take up the Coronavirus Business Interruption Loan

What follows is a brief summation of the current housing market fundamentals which existed prior to the current emergency measures taken and the ensuing disruption of the market. It is fully understood that the current situation is a dysfunctional one.

[All statistics which follow are the most recently available figures from the Land Registry and the Bank of England unless otherwise stated.]

England and Wales' average prices up year-on-year

Average property prices across England and Wales showed a monthly 1.3% fall to £242,424 compared to December's £245,652 which was the highest ever. The Boris bounce might have started to tail off although prices had increased 1.1% year-on-year which could have pointed to a sign of better confidence compared to the situation in the midst of very uncertain Brexit machinations.

Sales Volumes Fall

Sales volumes however did not bring good news: at 71,860 for November, the most recently-available month's total, this represented a 1.2% fall month-on-month and a much larger 18.2% fall year-on-year with this yearly percentage decline being the largest since February last year (18.7%). It was also the seventh month of yearly declines recorded in a row.

London: prices near peak with positive price movements for second month

Price data offered good news for the capital's estate in posting rises both monthly and yearly, 1.6% and 0.5% respectively for the second month in a row, to £483,922. This nearly equals the highest prices ever - £484,724 – recorded in July 2017.

Estate agents in the wider country will observe this with interest in terms of the possible situation after main Coronavirus emergency has passed as as London is regarded as a bellwether for price movements.

Sales Volumes Fall

Similar to the situation for England and Wales, the most recently-available sales volumes figures for the capital showed a monthly and yearly fall, 5.7% and 17.9% respectively, to 6,707. Optimists will however hope that the monthly fall in volume levels is a glitch, being only the second month out of the last nine where a decline has been observed and that volumes will pick up after the emergency.

NAEA: positive news on sales and demand for February…

The National Association of Estate Agents (NAEA) reported an increase sales per branch to nine for February, a monthly rise of one and a steady yearly rise from seven last February (2019) and eight for the February before that (2018).

The NAEA reported an increase of almost one quarter in housing demand since February 2019, from 252 house hunters then to 322 in February this year. There was, however, a fall month-on-month from 382 in January, some 17%.

…but first time buyers decline

The number of sales made to first time buyers as a percentage of all buyers fell from 29% in January to 22% in February. Housing market stakeholders always observe first time buyer habits carefully as the 'feed-in' part of the market.

But only 70% (!) of properties were sold for less than asking price in February!

We flag this part up as newsworthy because, for as far back as is memorable, we've noted every month that 80% and more of all properties have been sold for less than asking price. We've stated that this little fact holds within it fundamental sign of the dysfunctionality of the UK housing market.

Therefore we welcome a significant decline – to 70% – in this percentage as a sign that housing sellers are becoming more realistic in their upfront pricing.

Andrew Boast, co-founder of SAM Conveyancing, said:

"Our most positive thoughts are wished to everyone in the midst of this awful Coronavirus pandemic."

"Many in our market and sector are understandably panicking at present: we urge anyone currently in the buying and selling process to click on our article for the most up-to-date guidance from the key regulators and industry bodies."

"Our brief summary of fundamentals prior to the emergency is intended to show some positive developments - and which we hope will carry forward as things return to normality"

"We continue to stay open and look after our existing clients and request anyone with useful housing market information to contact us so we can disseminate it to our readership. Let's work together as much as humanly possible to defeat this virus: we can all do it."