ARK’s Market Synopsis

Commentary

Welcome to the latest edition of ARK’s Market Synopsis report covering market outcomes to the end of May and with Rightmove picking up reporting for June.

On 13th May the English housing market re-opened meaning that people were able to move homes and rent a property for the first time since mid-March.

This month’s reporting makes it evident that with much time spent indoors people are reassessing their existing homes. This has created a shift in housing preferences and people wanting more living space. COVID-19 will most likely create a ‘new normal’ in the way we live and work. This in effect poses the question whether there is a long-term demand for bigger homes? In our blog ‘Housing equality and race for space’ we discuss the need for bigger homes in the UK.

Moving on to house prices we see the full effects of the lockdown in this month. Halifax reported that “average house price fell by 0.2% to £237,808”. Nationwide also paints a similar picture saying, “UK house prices fell by 1.7% over the month in May, after taking account of seasonal effects – this is the largest monthly fall since February 2009.”

Hometrack shows a +2.4% rise (YOY and reflecting pre pandemic inputs) in UK house price inflation and expect house price growth to remain in the 2-3% range over the next quarter. In addition they say, “Sales agreed have now rebounded to pre COVID levels as have the number of new homes being listed for sale…the rebound in sales has been led by cities in northern England.”

But the Hometrack report is not all rosy and says “we expect housing demand to weaken over the course of the summer as the economic impact of COVID starts to materialise, with widespread projections for increased levels of unemployment.”

Rightmove records over 175,000 missing sellers that could not come to the market from 24th March – 12th May. With that said “Rightmove’s statistics covering 95% of the market indicate far more resilience than had been expected, with a strong initial bounce-back in all metrics.” Rightmove report 40,000 new sales agreed since the reopening of the marketing, along with the release of pent-up spring demand.

Looking at the RICS reporting, agreed sales remain in negative territory (-35%), nevertheless, less pessimistic than in April (-93%). New buyer enquiries stabilised, moving from a record low reading of -94% in April to -5% in May. Furthermore, RICS mentions “near term price expectations remain downbeat, albeit to slightly lesser degree than beforehand, with the net balance standing at -43%.”

Finally, this report covers the Quarterly survey for Q4 which is published by the Regulator of Social Housing. The survey highlights the number of affordable and market sale homes PRPs have built and sold.

The Regulator reports “AHO sales were 3,959 units (December: 3,826) compared to the 4,870 completions reported in the quarter (December: 4,150).”

Demonstrating that AHO was on an upward trajectory the Regulator said “The 3,959 sales achieved in the quarter to March 2020 was the highest number reported since the data was first collected in 2011, and the sales figures have been on the increase since June 2019.”

Reporting Market Sales Homes the Regulator reported “There were 1,363 sales in the quarter (December: 1,213) compared to the 1,944 units developed for market sale (December: 1,554). The total number of unsold market sale units increased by 21% to reach 3,073 at the end of March (December: 2,537).”

Bearing in mind that the shutdown did not impact 2/3 of Q4, we recommend PRP boards and committees should be keeping an ever-closer eye on their unsold stock.

Click here to download full report.