Traditional July peak in sales and lettings markets will be pushed back

The Covid-19 pandemic is likely to alter well-established seasonal patterns of buying and renting in UK property markets.

Sales transactions peaked in July last year before tailing off towards the end of the year, reflecting the typical seasonal pattern of activity. Tenancies agreed followed a similar pattern, with a more marked decline in the second half of the year, as the chart below shows.

Once lockdown measures are relaxed, which some believe could happen in late May or June, a spurt of activity could push this traditional July peak back to August, September or later.

“The traditional August exodus is going to disappear this year,” said James Clarke, Knight Frank’s head of London sales. “A lot of the completions that traditionally take place in the summer will be pushed back into the third quarter of 2020,” he adds, noting that the potential for curbs on international travel may add to this effect.

“We’re preparing for a busier late summer period than normal,” says Gary Hall, head of lettings at Knight Frank. “The nature of the lettings market means it could explode quite quickly once restrictions are relaxed or lifted.”

David Mumby, Knight Frank’s head of central London lettings, agrees. “There’s no sense of a permanent withdrawal, no lack of demand. There’s a finite amount of stock available in the capital and both tenants and landlords are aware that if they don’t move quickly, they will miss out.” 

While a delay could curb activity in the student lettings market ahead of a September start date, this was being compensated for to some extent by the fact a number of tenancies were being agreed virtually with international students.

The type of new and newly-refurbished properties typically in higher demand among international students made this easier, as a recent Knight Frank analysis shows.

Meanwhile, outside the capital, where seasonal buying patterns are more entrenched, there is a similar belief that 2020 could prove to be an exception.

“If we’re up and trading by the summer then we will have a prolonged market,” says Edward Rook, head of Knight Frank’s Country Department. “However, if this re-opening only happens later in the year, sales are more likely to be deferred until 2021.” 

Christopher Bailey, head of Knight Frank’s Waterfront department, believes sellers are pragmatic about the current restrictions and are not looking to take property off the market, which bodes well for a busy second half of 2020 as supply is able to match renewed demand . “No one’s in a rush. Low interest rates have taken the pressure off sellers who remain positive about the market and there remains plenty of pent-up demand from buyers.”

The number of new prospective buyers increased by 14% across the UK in the year to January 2020 compared to the previous 12 months.

In London, just one in five deals underway when the Covid-19 pandemic struck have fallen way, demonstrating the underlying resilience of the market.