373,000 property transactions, with a total value of £82bn, are on hold due to the Covid-19 outbreak, according to research by Zoopla.
Its figures show 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.
The rate of fall-throughs peaked on 23rd March, the day of the lockdown, and has fallen back as the volume of new sales being agreed declines.
New sales agreed are running at a tenth of the levels recorded in early March, with volumes similar to levels seen in late December.
Zoopla’s figures show that demand for housing 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, 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 predicts 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. More positively, the total number of properties for sale is just 4% lower than levels registered at the start of March, as vendors maintain listings,.
Richard Donnell, director of research and insight, said: “There is a two speed housing market at present. Parts of the market are at a virtual standstill as a result of the physical restrictions that have stopped new supply coming to the market and the viewing of homes for sale. However, the online browsing of homes for sale and buyers expressing interest in property have been rising off a low base over the last two-three weeks. Demand for housing is still 60% lower than at the start of March, but we expect interest in housing to continue to improve slowly. Northern cities have seen the strongest improvement in underlying demand although levels remain half those at the start of the crisis.
“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.”