The impact of coronavirus restrictions on the UK property market was underlined in official data showing the number of housing sales more than halved in April.
In its seasonally adjusted data — the first for a full month under lockdown — HM Revenue & Customs said the number of transactions was 53.4 per cent lower than in April 2019. Month-on-month activity fell by 46.1 per cent.
Property deals were put on ice under the government’s lockdown rules, which effectively halted the homebuying process after buyers, sellers, estate agents and surveyors were told to stop visiting occupied properties.
HMRC said its provisional estimate of residential transactions had fallen to levels last seen in the global financial crisis in 2008, reflecting the impact of coronavirus and government measures to limit transmission of the virus.
Analysts warned that worse was likely to come with a further drop in activity expected in May. The HMRC figures record completions, so many of those transactions that closed in April will have involved deals where contracts were exchanged, in January and February, before coronavirus hit the UK.
Lucian Cook, residential research director at estate agent Savills, said: “My suspicion is that the full impact is more likely to be seen in the May numbers but it shows a good indication of the substantial impact on activity. It’s our first concrete evidence of the impact of Covid-19 on housing transactions.”
Zoopla, the property website, in March predicted that transactions would drop by 60 per cent over the three months from April.
Some buyers and sellers delayed completion in line with government guidance that called for house moves to be postponed during the lockdown.
Others completed but added clauses to contracts delaying moves until the “stay at home” restrictions lifted. Some sales of new build homes were able to proceed as buyers faced fewer restrictions when moving into vacant homes.
“There was always going to be a core of sales that went through but a good chunk of it was stuck at exchange,” Mr Cook said.
Neal Hudson, director of market research group Residential Analysts, cautioned that HMRC’s provisional numbers could yet prove optimistic as the data had become more volatile in the past year. “I think we may well see the numbers revised down when we get more data.”
Since the government announced a partial lifting of restrictions on the property market on May 13, estate agents and other property market professionals have reported a surge in activity from “pent-up demand”. Knight Frank, the estate agent, said the number of new prospective buyers registering with the agent was at its highest level for nine weeks.
Rightmove, the property website, said buyer demand in the first week of the market reopening — as measured by people contacting agents via the site — was up 120 per cent on the previous week and just 7 per cent lower than the same week last year.
Agents remain cautious, however, over the long-term impact on the housing market from the heavy damage the lockdown has inflicted on the economy. Knight Frank is sticking to its previous forecast of 526,000 lost sales in 2020, with fewer than half of those set to return in 2021 and a decline in house prices of 7 per cent in 2020.