Market still resilient but can it really withstand the Covid recession?

A housing index says the market continues to defy Coronavirus and Brexit worries with asking prices up 4.9 per cent in the past year.

The Home index says even London asking prices have not suffered significantly despite many sellers moving out of the capital - prices have risen 3.0 per cent in the past year in Greater London.

Home’s statistical analysis of the market shows how hectic it remains, with only 10 weeks before the end of the stamp duty holiday.

Asking prices hold firm, nudging up 0.1 per cent across England and Wales since last month, taking the annual average to 4.9 per cent.

New listings - even in December - were 68 per cent up on the same month a year earlier, although unsold stock levels reduced slightly for a second consecutive month.

By contrast, supply across the English regions, Scotland and Wales is outpaced by demand and this is pushing up prices. Overall, total stock for sale in England and Wales has fallen to a new record low thus bolstering vendors' confidence.

The northern property markets show what Home calls “phenomenal strength” with Yorkshire and Humberside showing very strong asking price growth of 10.1 per cent followed by the North West with 8.2 per cent. 

Greater London is currently the UK's worst-performing region; its 3.0 per cent growth is weighed down by supply and significant price falls in more central areas. Average prices dipped in just two regions of England and in Scotland during the last month.

Typical Time on Market works out an an average 101 days for unsold property, 19 days less than in January 2020.

But Home’s latest market snapshot comes with a warning.

It says: “It is unrealistic to think that the UK property market will not be affected by the worst economic downturn in 300 years. In fact, the warning signs are already apparent. Rent arrears are on the rise, with more than half of UK landlords surveyed by the National Residential Landlords Association having lost income due to the pandemic. This is clearly not a sustainable situation.

“Indeed, the true level of economic devastation is as yet unknown. Given the best outcome, that the virus is brought under control by vaccination, restarting the economy will not be like switching a light back on. 

“Many businesses (and livelihoods) will simply be gone forever and it will take time for those businesses that remain to return to profitability. 

“Moreover, forbearance on the part of mortgage lenders is likely to be limited in the absence of further government intervention. Precisely how many homeowners will be forced to sell in 2021 due to job losses and business failure is as yet unknown.”