The sizable surge of demand that followed the lifting of real estate industry restrictions in England two weeks ago is likely to be short lived, according to a report released Wednesday in the U.K. from Zoopla.
Online demand for homes in England—defined as active engagement with listings, including inquiries—jumped 88% in the week ending May 19, the same week that the government allowed the property sector to resume operating under new guidelines, the report said.
The surge was 20% higher than at the start of March, before the housing market entered into lockdown to fight the spread and impact of the coronavirus. The lockdown measures involved a near-complete shutdown of the real estate sector, with buyers and sellers being urged to postpone moves and physical viewings banned.
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“The Covid crisis and 50-day lockdown have created an unexpected one-off boost to housing demand,” Richard Donnell, director of Research & Insight at Zoopla, said in the report. “Millions of U.K. households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting. Many households are likely to have re-evaluated what they want from their home. This could well explain the scale of the demand returning to the market.”
But with increasing levels of unemployment and a decline in economic growth on the horizon, the increase could be short lived, the online property portal said.
“The economic impacts of Covid will grow in the coming months, and uncertainty is building,” Mr. Donnell said. “The majority of would-be movers plan to continue their search, encouraged by low mortgage rates and continued government support for the economy. However, we expect the latest rebound in demand to moderate in the coming weeks as buyers and sellers start to exert greater caution.”
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In cities across Scotland, Wales and Northern Ireland, where industry restrictions remain in place, no rebound has been recorded, according to the report.
Demand was lowest in Edinburgh, down 57% in the week ending May 17, compared to the average level for February 2020.
Despite being the English capital, recovery in London is lagging behind, with demand more on par with cities in the aforementioned countries where the housing market is yet to reopen. Demand for homes in the city has been diluted as potential buyers look outside the capital in response to the pandemic, the report said.