House hunter demand spikes but rebound ‘will be temporary’
Buyer demand rose by 88% in the week to 19 May, after the market reopened and viewings started again, and was 20% higher than at the start of March, according to online property portal Zoopla.
However, with projections for a major decline in economic growth and rising unemployment, the rebound in demand is expected to be temporary.
Richard Donnell, director at Zoopla, said: “The economic impacts of Covid will grow in the coming months and uncertainty is building. 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. Further support from the Government can’t be discounted and would help limit the scale of the downside risks.”
Cities in Scotland, Wales and Northern Ireland registered less of a bounce in demand as their national housing markets remain closed.
The rebound was also less pronounced in London than other English cities partly because would-be buyers are looking to commuter towns outside the capital in response to Covid.
Meanwhile, a consumer survey by Zoopla found that 60% of buyers in the UK are planning to continue with their search for their next home, with 22% of respondents saying they have not been impacted by Covid-19 and expect to continue unaffected.
However, 40% said they have have put their plans on hold.
Donnell said: “The Covid crisis and 50 day lockdown have created an unexpected one-off boost to housing demand.
“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.
“This could well explain the scale of the demand returning to the market. We need to see more supply come to the market to satisfy this demand.”
Zoopla said new sales agreed in England have increased by 12% since the market reopened in mid-May, while house price growth remained flat over April.