Demand for housing in England has surged above pre-lockdown levels, with buyer demand rocketing 88% in the week ended 19 May.
According to the latest UK Cities House Price Index by Zoopla, demand was 20% higher than the start of March, with the noted rebound coming two weeks after the government reopened the property market.
Following the recent suspension of the housing market, the property group said that a return of “pent-up demand” was to be expected, “especially given the strong start to the year”.
Nonetheless, Zoopla warned that this rebound in demand is expected to be “short-lived”, with projections for a major decline in economic growth and rising unemployment in light of the ongoing pandemic.
Zoopla also noted that recovery in London is “lagging behind” as buyers instead look to commuter towns. Instead, demand has rebounded faster in cities along the south coast and in northern England.
Looking ahead, Zoopla said that its latest report identifies “two distinct aspects for consideration”. The first is how many of the 373,000 stalled sales make it to completion, and the second is how much the demand for homes “holds up” and converts into new sales.
Nonetheless, the reopening of the market has improved the chances of a higher proportion of stalled transactions completing, says Zoopla, who also expects a “significant proportion” of agreed sales to continue.
The group still warned that an “increased uncertainty” over the economic outlook will see housing chains “tested” in the coming weeks.
While 60% of UK buyers in the UK were still planning to continue searching for their next home, 41% have “put plans on hold”, however, citing market uncertainty, loss of income, and “diminished confidence in future finances”.
Richard Donnell, director of research and insight at Zoopla, said: “The scale of the rebound in demand for housing is welcome news for estate agents and developers, but it is also surprising given projections for a sharp rise in unemployment and a major decline in economic growth.
“The COVID crisis and 50 day lockdown have created an unexpected one-off boost to housing demand. 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.”
He added: “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.”