How Might Property Transactions Look In 2020

Of course, we don’t know the answer to this question. The UK has been in lockdown for over 5 weeks with no concrete announcement as to when measures may ease, although there may be some news on Monday. Like all other UK Estate agents doors our doors have been shut, although we have had a few completions still going through, even as late as yesterday, and enquires are still being received.
However, the transaction data for April and May is likely to show the lowest ever level of monthly sales.

This was not the story of the first few months of 2020. After all the uncertainty around Brexit and the election during 2019, 2020 began fairly positively with much speculation of a ‘Boris bounce’. With demand and confidence building, the RICS reported a rise in new sales activity in the first couple of months of the year, sales completing in January and February were 4% higher than a year earlier and applicant registrations were increasing.

Then Covid-19 brought the market to a standstill. Those agreed sales have not all disappeared though, as confirmed by our agent survey. The vast majority of buyers remain committed to their purchases with Zoopla reporting that 373,000 sales were placed on hold at the beginning of lockdown.

It is inevitable that a proportion of the 373,000 sales agreed before lockdown will fall through as buyers seek to renegotiate prices, their financial or personal situations change, or they simply change their mind. One of our recent buyers wanted a £30k reduction on a £200k purchase which was quite rightly was refused by the seller and we have already received a number of new enquiries for it.

Starting from the Zoopla view of sales agreed before lockdown we made adjustments based on our own assumptions. We adjusted downwards to account for fall throughs, then upwards for new sales agreed once lockdown lifts. It assumes that some elements of lockdown lift from June onwards allowing for some sales to be agreed, and gradually rising to more normal levels in October.

There are many views on the impact of the Covid-19 pandemic on transaction levels in 2020, most range from a fall of 20% to 40%. A 25% fall on 2019 levels would result in an estimated total of approximately 880,000 completions for 2020

August looks set to be the busiest month of the year with sale completions similar to August 2019

Will prices crash in coming months
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I don’t believe that this will happen. For prices to collapse the market would need to be flooded with sellers willing to sell at any price. Many homeowners’ incomes will have taken a hit during this period and unemployment levels are set to rise. However, with mortgage holidays offered by the banks, the furlough scheme and other financial support for businesses and the economy, a cushion of support is buffering many households.

At the same time, we know that there were many buyers looking to buy before Covid-19 and many believe that this pent-up demand is still building and will spill into the market in the months following lockdown. It may happen gradually and recovery may take some time, but confidence will return. It always does.

Please contact us if you need any help or advice on The Wigan Property Market

01942 233999 or Email. alan@alanbatt.co.uk