Housing and rental market demand surges in UK

By Alia Khan, Consultant 

Following the Government’s announcement last month to reopen estate agents, data sets emerging from the industry show a significant release of pent-up demand in both the housing and rental market in the UK. Although this was to be expected, the level of interest is a surprise.

The Rental Market

Global property consultancy Knight Frank reports that the number of new prospective tenants was 4% above the five-year average in the week ending 30 May. But more notable was  the number of valuation approvals for letting properties: in the week ending 6 June it saw the highest number on record, 19% above the five-year average.

Demand is further expected to strengthen as schools begin to reopen and universities begin to announce how they will be teaching their courses next academic year. Previously, uncertainty around schools and universities has caused tenants to delay moving.

The Housing Market

The housing market is also experiencing a growth in demand as record levels of offers have been accepted a month after lockdown restrictions were eased. Data from Zoopla shows that demand for housing at the start of June was 54% higher than at the start of March. The number of sales agreed, while lagging behind demand, have largely returned to last year’s levels. Evidence is also emerging that COVID-19 has  created a boost in demand and produced a new cohort of buyers. It seems the  pandemic has prompted many people to re-evaluating their living conditions looking more for houses with balconies, gardens and near outdoor spaces.

Property market activity had halted during the eight-week period between March and May due to the  pandemic, but the recent surge  has also prompted  more sellers to enter the market. Knight Frank reports that supply has started to catch up with demand. As a result, prices have started getting firmer, with the average discount to asking price for exchanges outside London reduced to 2.6% since the market reopened, compared to 4% during lockdown. In London, the average discount has also narrowed to 3.9% from 6.4% since lockdown.

According to further emerging data, pent-up demand for new homes has also triggered a rise in the number of UK applicants registering their interest to buy homes. This will certainly have followed on as a result of the pandemic, which seems to have contributed to the stabilisation of house prices and many re-evaluating their current living conditions.

Demand has certainly risen in both the housing and rental market in the last month, but the question is whether the uptick will be sustained. The lockdown may have led many to revaluate their living conditions, but the uncertainty around employment and wider economy remains, which will ultimately lead to continued lender caution. The significant increase in interest in properties with outdoor spaces, if it continues, may also force the industry to rethink design in the future.