Homes are getting snapped up around 31% faster than they were back in 2019. As conditions remain unseasonably strong, can we expect momentum in the UK property market to continue?
While earlier this month, the UK economy officially entered recession, it seems the housing market remains unperturbed. As people rush to secure property after putting off plans during lockdown, both buyers and sellers are increasingly active.
The effects are particularly noticeable when it comes to time to sell. According to the latest data from Zoopla, every UK region is seeing faster sales. Over the past three months, the property portal has found that the average home is selling in 27 days. This is more than a third (31%) faster than the same three months in 2019.
For buyers, this means acting quickly to secure the best deals. The reduced stamp duty rates alongside very competitive mortgage rates are further incentive for buyers to make a move sooner rather than later. When looking at past recessions, Zoopla says, sales volumes are often one of the casualties. However, the latest activity levels show that this scenario may be taking quite a different path.
The knock-on effect on house prices
Zoopla’s latest report also looks at what’s happening with house prices across the country. On a local level, areas in the north have seen the biggest annual increase in UK property prices as of July.
In Nottingham, house prices have risen by an average of 4.4% over the 12 months to July. This is closely followed by Manchester with 4%, Leeds with 3.6% and Liverpool with 3.3%. The UK average is a 2.5% increase.
The property portal believes that a certain amount of supply and demand imbalance is supporting the rate of growth. Demand is rising at a faster rate than available housing, with a 34% annual increase in buyers seeking homes. While the past month has seen a 50% uptick in the flow of new supply, available homes per agent are 3% lower than in 2019. Because of this, Zoopla says, house prices are likely to continue to increase throughout 2020.
“There is no sign of any immediate deterioration in price growth despite the onset of economic recession. Government support for the economy has been vital in supporting business and consumer confidence,” says the report.
Using history to predict the future
It is interesting to draw comparisons between past economic downturns and difficulties and the current one. There have been five recessions over the past 60 years, all with different causes and outcomes. The two most recent recessions were the most serious, and led to “nominal house price falls”.
The report says: “The most important aspects for UK housing is the impact on household incomes, credit availability, mortgage rates and unemployment.”
“While the economy has contracted sharply and unemployment is rising, consumer spending has rebounded and purchasing manager indices are pointing to a wider rebound in the economy. This is positive but the unwinding of the furlough scheme and other government support is the next challenge that will test the strength of economic recovery.
“In the short term we still believe that house prices will end the year 2% to 3% higher than at the start.”