A high number of buyers have postponed or pulled out of property deals as a result of the coronavirus outbreak fearing that economic uncertainty would make their purchase unaffordable or hoping that prices would later fall, new research suggests.
Some 373,000 property transactions have been paused during coronavirus lockdown, with a combined estimated value of £82bn, according to Zoopla.
The property website reports that the majority of the sales were agreed between November 2019 and February 2020, and would have been set to complete between April and June.
A handful of sales are still being progressed, with some buyers seemingly want to press ahead with agreed transactions, encouraged by government support for the economy and low mortgage rates.
The demand for housing unsurprisingly fell by 70% between the start of March and the week ending 29th March, with the greatest decline recorded ahead of the lockdown. The drop in demand bottomed out in early April and has since started to improve slowly off a low base.
Despite a steady increase in buyers looking for homes online, demand still remains 60% below the levels recorded at the start of March.
While households are unable to view homes for sale in person, they can still browse online. Browsing of property listings fell in line with demand but to a lesser degree. Levels have bounced back more strongly over the last three weeks, but remain 35% lower than the start of March.
Zoopla’s latest forecast is that completed sales will be 50% lower in 2020 than 2019, allowing for a proportion of stalled sales to complete and with a delay to sales that would have progressed.
It is too early to forecast the impact of coronavirus on house price performance in 2020.
Richard Donnell, director of research and insight at Zoopla, said: “Sales continue to be agreed in low volumes by purchasers who viewed homes ahead of the lockdown, but there is a large pipeline of agreed sales held up by the temporary suspension of the sales market worth £82bn. In addition, these sales will generate associated spend resulting from housing transactions that can stimulate economic activity.
“Without doubt, once the coronavirus restrictions are relaxed, we should expect the release of demand that has been building since Brexit and political uncertainty destabilised market sentiment. That said, the case for a stamp duty holiday to support a resumption of market activity is clear and a high proportion of savings are likely to be spent, further stimulating economic activity.
“We expect completed housing sales in 2019 to be half of those in 2020, having lost close to two full months of market activity by mid-May, and taking into account time for agents to rebuild sales pipelines.
“Many households have spent more time at home in the last few weeks and some may feel the urge to move and find more space or consider the potential for remote working. This could boost activity in the second half of 2020, but this all depends upon how much the economy is impacted over the rest of the year and the impact on levels of unemployment. It is too early to register any pricing impact given new sales volumes are 90% down on the start of March. Demand is rising but there is a long way to go until we see a return to typical levels of market activity.”