Category: Market Commentary

Housing Market Recovery Stronger Than Expected

Stamp Duty Holiday Introduced Too Soon?

Transaction & Housing Supply Scenarios

The housing market may have been all but extinguished from mid-March to mid-May but it’s now running hotter than a typical British summer and the government has thrown on more fuel in the form of a stamp duty holiday to keep the fire ablaze. What remains uncertain and concerning is what happens when the backlog of activity delayed by lockdown fades and the full effect of massive shocks from Covid-19 and Brexit feed through. This note looks at the limited evidence so far, questions whether the government have gone too early with their stamp duty holiday, and presents our illustrative scenarios for transactions and housing supply.

Continue reading “Market Commentary – July 2020”

•Market Bounces Back But How Much Is Just Delayed Demand

•Crash or No Crash, This Will Exacerbate Existing Housing Inequalities

The housing market has reopened in England and it appears to have ignored the last three months and taken off from where it was prior to the lockdown. There are numerous reports of high demand and the number of sales agreed rebounding back to normal levels. The lockdown is easing, the economy is slowly recovering, and house prices are rising. But this bounce is unlikely to last given the massive economic shock and on-going credit crunch in the mortgage market. Irrespective of the outcome, the current market will exacerbate existing inequalities.

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– The Housing Market Has Restarted But The Economy Is Stalled

– The Recession And A Credit Crunch Will Limit The Recovery

The housing market reopening for business last week was welcome news but caught many unaware, including the government. Restarting the housing market was always going to be a priority given its importance to the economy, so it is not surprising that restrictions have been eased as early as possible. Initial data suggests that interest from consumers has rebounded, though perhaps not as much as estate agents’ excitement. The market will almost certainly recover from the low levels of transactions reported in yesterday’s HMRC release but it will take time for delayed and new purchases to reach completion. Meanwhile, the economic data continues to worsen and the largest economic shock in recent history will limit potential buyers’ ability and enthusiasm for making the biggest financial decision of their life. The housing market may have restarted but the economy is stalled and there is a credit crunch limiting lending at higher loan-to-value ratios.

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The past will be revised. The present is confused by COVID-19. And the unprecedented effects of the lockdown cast enormous uncertainty over the future of the housing market. None of this has curbed the enthusiasm estate agents have for publishing house price forecasts.

True, there’s a huge need for guidance in these troubled times. But putting definitive numbers on where the housing market is heading seems, at the moment, pointless. So, in our first UK housing market commentary we will start by admitting that there’s little that can be said with certainty. Therefore, this note will focus on what we know, what we’d like to know, and the risks we see in coming weeks, months, and even years.

Most market commentary involves speculation and projection based on recent trends, if only because lags in the data demand it. In times of sudden change, like now, the past trajectory is often of little consequence. So the post-election “Boris Bounce”, if it existed, is now irrelevant. But recent data does reveal clues to deeper underlying trends that may help us as we strive to understand life in a post-lockdown housing market.

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