Post-lockdown surge endures against backdrop of mixed economic news
The property market has rebounded after an eight-week shutdown but 2020 may produce a unique pattern of trading activity
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The post-lockdown surge in property market activity has continued into its sixth week, as some indicators hit record levels.
The number of offers accepted in the UK in the week ending 20 June was the highest figure on record, as pent-up demand is released following the market’s eight-week shutdown.
Since the market re-opened in mid-May, demand indicators have risen to levels that suggest sales and lettings transactions will increase over coming months. However, against a backdrop of mixed economic news, doubts surround the longevity of the current bounce.
“Demand built up as a result of the lockdown but also the political turbulence and changing tax landscape of recent years,” said Tom Bill, head of UK residential research at Knight Frank. “The market has picked up where it left off following December’s general election. However, we are not yet in a position to fully assess the economic impact of the pandemic, which means 2020 could produce a particularly uneven pattern of activity.”
Property transactions in May were 50% lower than the figure recorded 12 months ago, provisional data from HMRC showed yesterday, underlining the impact Covid-19 has had on property markets. However, the total of 48,450 was a 16% increase on April, suggesting transactions have bottomed out even if the future trajectory for the property market remains unclear.
Other indicators for the week ending 20 June include:
- Sixth highest week on record in London for the registration of new prospective buyers. The top five were all in the first two months of this year.
- The eighth highest week on record for the number of new instructions to sell in the UK, underlining how demand and supply are becoming more aligned.
- The fourth highest week on record for viewings in the lettings market, despite the continued restrictions around social distancing and the use of PPE.
Meanwhile, the economic data remains mixed. The FTSE 100 rose last Friday following a rebound in retail sales in May.
However, on the same day, the country’s debt to GDP ratio rose above 100% for the first time in more than 50 years due to the government’s unprecedented financial response to the pandemic.
The Bank of England chief economist Andy Haldane voted against the £100 billion in extra quantitative easing recently agreed by the Bank, pointing to the fact the recovery was “occurring sooner and materially faster than anyone expected”.
At the same time, the Bank predicts the labour market will “take some time to recover towards its previous path” and warned of the risk of "higher and more persistent unemployment".