After almost 2 months of lockdown UK housing market set to return

The UK housing market is grinding back into action after 7 weeks of almost no activity because of coronavirus. Zoopla recorded a surge in search activity with demand in London up almost 80% following nearly two months of restrictions. Although the lockdown has effectively frozen the UK’s property market, it hasn’t killed it. Even though the lockdown has made physical viewings not possible due to the government restrictions, LondonDom continued to agree both sales and rentals deals based either on the viewings before the confinement or purely based on our brochures, videos and floorpans. With the gradual easing of the UK lockdown announced this week, people are starting to refocus on getting their lives back on track and rethink their property needs. 

There are many purchasers and investors looking for good deals but the main key to unlock the market is sellers' expectations. We find that many vendors have no real motive to sell at low prices and think that real estate is probably the safest place at the moment. With the incredibly low mortgage rates available there is no reason to sell at a loss. Buyers at the same time are expecting that the prices must come down as a result of the pandemic. Therefore it's not unreasonable to expect that the transaction numbers will be reduced in the next few months after the lockdown as buyers and sellers try to establish some pricing equilibrium. 

It is almost a norm nowadays for the buyers to offer 5-10% below the asking price, however many of our sellers gave us clear instructions that they will only consider offers closer to the asking numbers. Many of our buyers are comparing the current situation with the financial crisis of 2008 and so predicting a further drop in prices of about 15%. It is important however to remind ourselves that the property market in London was overheated by 2008 and the subsequent drop of 15% came from the highest levels. Before 2020 we experienced over 4 years of a pretty slow market and a reduction in prices of up to 25% in certain areas of the capital.  

At the beginning of this year after December's elections and prior to the recent events most agents had one of the busiest periods in years in terms of viewings and agreeing deals. There is clear evidence that this pent-up demand is still there especially in London. Nobody has a crystal ball and until we know how long the current situation will last and how it will alter the domestic and global economy, it will be difficult to predict what might happen next. But it's worth remembering that the prime London market is usually the first to show signs of recovery.