A new survey confirms that activity in the property market fell sharply in March as the UK went into coronavirus lockdown.
Estate agents reported a drop in all measures of activity during the month, including enquiries from new buyers, agreed sales and properties coming on to the market, according to the Royal Institution of Chartered Surveyors.
Their report echoes our own Zoopla research, which revealed the number of new property sales agreed in the UK has fallen by 70% since the start of the coronavirus restrictions.
Housing prices are expected to dip in the coming 12 months, before resuming their upward trend over the long term.
Call for a coronavirus stamp duty holiday
RICS called for the government to introduce a stamp duty holiday to help the post-pandemic housing market recover.
Hew Edgar, RICS Head of Government Relations said: “These are exceptional circumstances and the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.
“RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid 19 was that it required a full-scale review.
"As we start to emerge from this crisis, however, it is likely that the finances of potential home buyers will be under strain, and the burden of stamp duty could put buyers off.
"For those who can afford to move they may lack confidence in the market, adding to the slow down. A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”
Why is there a drop in housing market activity?
It's unsurprising, given that estate agents are currently not allowed to accept new property listings or conduct physical viewings for properties already on their books.
The government has also asked people to delay exchanging contracts on properties unless the property in question is currently empty.
But it is worth noting that prior to the social distancing measures being introduced, estate agents had been reporting a marked pick up in housing market activity. Our own monthly Zoopla Cities House Price index report showed house prices were at their highest point since 2007.
Grainne Gilmore, our head of research, says: "Our data shows that demand for housing has declined sharply in March, but there is still some activity happening.
"We are also seeing browsing online, with buyers and renters mapping out their next move for when the lockdown restrictions ease.
"There is still plenty to look at, as the total number of listings of homes for sale and rent is broadly unchanged.”
Who does it affect?
Just because estate agents’ physical branches are closed does not mean buyers and sellers have to completely put their plans on hold.
While they cannot accept new listings, agents are turning to technology to continue to market the properties they have on their books, with a growing number offering video tours.
Our own Zoopla figures show that sales have continued since the social distancing measures were introduced, albeit it at a lower level, while there has been no large-scale withdrawal of homes from the market.
We have also seen an increase in people browsing properties on our site since the lockdown first began.
Be aware, though, that if you do put in an offer for a property, the conveyancing process is likely to take longer than usual.
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What about the rental market?
There was a fall in new instructions from landlords in March as a result of the lockdown measures.
Letting agents also reported fewer people looking to rent a home during the month, helping to ease the long-term mismatch between supply and demand.
This, combined with the economic uncertainty created by the coronavirus pandemic, led agents to predict rents will fall in the near term for the first time since the financial crisis.
Top 3 takeaways
1. Activity in the property market fell sharply in March as the UK went into lockdown
2. Agents reported a drop in enquiries from new buyers, agreed sales and properties coming on to the market during the month
3. House prices are expected to dip in the coming 12 months, before resuming their upward trend