The UK is in recession, with data today showing GDP dropped 20.4% in three months to June. But estate agents and housebuilders are hoping a series of recent measures by the government to boost the sector, after it was hurt by Covid-19 disruption, will be enough to help sustain the recent momentum around buying.
A number of firms had reported improved demand for properties since May, when estate agents’ offices and show homes could reopen from lockdown.
A further jump in enquiries came in July after Chancellor Rishi Sunak announced a suspension of stamp duty on property sales of up to £500,000 until March 2021. A two-month extension to the Help to Buy scheme in England has also been offered.
Various voices in the industry today reacted to the recession news:
Guy Gittins, managing director of estate agency firm Chestertons said: “With the country being effectively shut down for seven weeks, a recession was almost inevitable but the housing market has proved remarkably and surprisingly resilient.”
Gittins said in July, the number of new buyers registering and making offers on properties through Chestertons was 36% higher than a year earlier, “suggesting that many buyers are determined to press ahead with planned moves while they are in a position to do so and before prices start to rise more widely”.
Nick Leeming, chairman of estate agency group Jackson-Stops, said: “The property market has proved resilient post the market reopening in May and buyer confidence is still high.”
Leeming added: “As soon as estate agents were given the green light to return to work we saw the pent-up demand from when the market was closed translate almost immediately into sales. This, combined with the stamp duty holiday and many buyers wanting more space in their homes following the lockdown, is causing a spike in transactions across our network. Whilst today’s figures are bleak even if in line with expectations, this sentiment is certainly not translating into the housing market.”
Tom Bill, head of UK residential research at Knight Frank, said: “Recessions normally dent sentiment in the housing market, but not this one. The property market is currently as robust as it has been in many years. Pent-up demand is combining with a sense of uncertainty over what will happen later this year to produce an incredibly strong market in the short-term.”
Bill added: “Valid questions remain over how long it lasts and a fuller picture will emerge as the furlough scheme is wound down and the impact of any second wave of Covid-19 becomes clearer.”
Canaccord Genuity analyst Aynsley Lammin said the news today "should not come as a surprise to anybody given huge sections, including the housing market, were shut down for most of Q2".
Lammin said a key issue for housebuilders remains what happens when the existing Help to Buy scheme is modified next Spring and how the expected rise in unemployment impacts house prices and consumer confidence.
Charlie Bryant, chief executive of Zoopla, said: “The characteristics of this recession are markedly different from those of 2008/09."
Bryant said: “The housing market recovered rapidly when agents reopened back in May, and has continued to strengthen since that time and is currently holding steady at levels above those since at the start of the year pre-lockdown, which were already the highest we had experienced in the last four years."