Return of sellers paves way for more sustained recovery
The post-lockdown surge is more than a blip but bigger economic questions remain unanswered
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More balance between buyers and sellers has returned to UK property markets, creating the conditions for a more sustainable post-pandemic recovery.
After an initial burst of demand following the re-opening of the market on 13 May, the number of new sellers has risen and the ratio between supply and demand has normalised (see chart).
December’s decisive general election result triggered a release of pent-up demand that had built against a backdrop of political uncertainty and tax changes in recent years. The eight-week shutdown of the property market due to Covid-19 temporarily put this process on hold, however the scale of the economic fallout from the pandemic remains unknown.
“The fact more sellers are coming to the market shows the post-lockdown surge is more than a blip,” said Tom Bill, head of UK residential research at Knight Frank. ”However, the property market’s true resilience will be tested as the government’s economic support measures are wound down.”
The number of new instructions to sell was 31% higher than the five-year average in London in the week ending 27 June. The equivalent rise outside the capital was 38%. This compared to double-digit declines across the UK throughout April and May.
On the demand side, the number of new prospective buyers continues to climb. The number registering in markets outside London last week was the highest figure since June 2011 as buyers continue to seek more outside space after the lockdown. In the capital, the number was 78% above the five-year average last week.
“Supply levels have increased as sellers want to take advantage of what appears to be a very active market,” said Mark Proctor, head of Knight Frank’s south-west region. “Others believe that selling now is the prudent thing to do given the longer-term uncertainty surrounding the economy.”
The flow of economic news has been mixed in recent weeks. The UK’s debt to GDP ratio has risen above 100% for the first time in its history and unemployment is universally expected to rise. However, the Bank of England’s chief economist is one of a growing number of people pointing to a V-shaped recovery.
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