House prices not set to recover until at least Easter 2021

Estate Agents

The scale of the lockdown’s impact on the housing market has been revealed by a survey of estate agents.

The Royal Institution of Chartered Surveyors polled 360 branches around the country last month and found that new instructions fell to the lowest level recorded since the survey began in 1999.

A net balance of -96 per cent of contributors reported a drop rather than a rise in new properties being listed for sale. The survey found that 80 per cent of respondents had seen people pull out of transactions since the end of March.

A net balance of -92 per cent of respondents reported a fall in newly agreed sales while a net balance of -93 per cent reported a decline in new buyer inquiries in April.

On average, surveyors said they thought that it would take nine months for sales to rebound to the levels seen before the lockdown.

Casey O’Donovan, a surveyor at Indigoscott in London, said: “Whilst market conditions or a potential recession are of concern, job security and salary reductions are also influencing the decision not to proceed.”

John Andrews, of Doolittle & Dalley in Kidderminster, Worcestershire, said: “A much better start to the year after Brexit and sales looked promising for spring. Then came the lockdown and everything has gone on hold. Very challenging times are ahead.”

The majority of surveyors said that prices will be lower when the market reopens and on average they expected them to take 11 months to recover. About a third said that prices could be up to 4 per cent lower when the market reopens, while more than 40 per cent believed that they could fall by more than 4 per cent.

Peter Jones, of Gavaghan Jones Associates in Southampton, said: “The prime selling period is disrupted and even a small recovery is likely to be delayed until February or March 2021.

“I do not anticipate hitting pre-Covid-19 prices until Easter 2021 at the earliest. Availability of personal credit and mortgage finance will be key.”

The lettings market reported a sharp fall in demand and a net balance of -64 per cent of respondents reported a decline in instructions. A net balance of -35 per cent expected rents to fall across the country in the next three months, although on average respondents expected rents to stabilise in a year’s time. In five years’ time, rental growth projections stand at about 2.5 per cent per annum.

Estate agents’ responses to the survey reveal huge uncertainty about their future prospects.

James Brown, of Norman F Brown in Richmond, North Yorkshire, said: “Will the market be the same as in 2008? We’ll have to see.”

Some surveyors are living up to the optimistic typecasts of the profession. Tara Paul, of Bells Southfields in London, said: “I really feel that prices and activity will surge after the markets reopen. The market was about to recover to a healthy level of activity and sales after Brexit and now the brakes have been put on once again.”