Two-fifths of UK home buyers and sellers have put their property plans on hold following the coronavirus crisis, in a sign of how the recession could weigh on property transactions and house prices.
Research by property website Zoopla found 41 per cent of would-be home movers across Britain had stepped back from their property plans in light of market uncertainty, loss of income and lower confidence in their future finances, in a survey of 2,000 individuals between May 12 and 19.
Restrictions on the property market were lifted in England on May 13, allowing buyers and sellers, estate agents, surveyors conducting valuations and other professionals to visit occupied homes as long as they observe public health precautions.
Zoopla said demand among buyers — tracked in ways that included inquiries to agents on specific properties — had soared 88 per cent after the property market reopened.
However, Richard Donnell, Zoopla research director, said he expected the initial release of pent-up demand to subside.
“The economic impacts of Covid will grow in the coming months and uncertainty is building,” he said. “The majority of would-be movers plan to continue their search, encouraged by low mortgage rates and continued government support for the economy.
“However, we expect the latest rebound in demand to moderate in the coming weeks as buyers and sellers start to exert greater caution.”
Measures of more committed demand — namely, when new sales are agreed — were up by only 12 per cent since the market’s reopening, according to Zoopla data. That is a much more modest rise from levels that were already 90 per cent down on typical sales volumes at this time of year.
Mr Donnell said the lockdown could also be causing buyers to rethink their choice of property. “Millions of UK households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting. Many households are likely to have re-evaluated what they want from their home,” he said.
Another factor weighing on the market is the availability of mortgages for first-time buyers with little in the way of a deposit. High loan-to-value mortgages, which were pulled from the market by lenders around the start of the lockdown, have been gradually reintroduced but the availability of 95 per cent LTV home loans remains thin.
Bank of England data from July 2019 showed that almost a fifth of new mortgages were at an LTV ratio of 90 per cent or above.
“Committed first-time buyers may need to find more equity to put into purchases, or step back from the market,” Zoopla said. “Many may look to the Help to Buy scheme to buy a new home using a 10 per cent deposit.”