Covid-19 – Impact on UK property market

Jun 24, 2021
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Year 2020 has brought an unprecedented challenge to all of us which we will never forget. Conid-19 pandemic brought us to a stand-still and forced us into an adverse economic situation all over the world. Because of the lockdown implemented everywhere, the retail sector across the globe has faced huge economic challenges. Although the ease of restrictions showed us a light at the far end of the tunnel, there is still a long way forward in terms of economic recovery.

The situation in the Real estate sector is not hugely different. People acknowledges the fact that the property selling and letting transactions has dipped to a large extent but the question is – how much? In this article we have made an attempt to do a statistical analysis of the 2020 property transactions against that of 2019. For this we have used the price paid data from Land Registry.

Typically, following questions come in our mind when we think of an impact of Covid-19 on UK property market:

• How much hit we have in terms of number of property transactions?
• Which areas are affected the most and which are least?
• What’s the impact of this situation on property prices?

Using the land registry price paid data, let’s see how 2020 looks like against 2019.

How much hit we have in terms of number of property transactions?

In 2019, in England and Wales, total 871 thousand property transactions were made with a monthly average of approximately 72 thousand transactions with average property price of approximately £353,000.

2019 property transactions graph

 

As compared to that, in 2020, total 264 thousand property transactions were made from January to July. In 2019, for the same period, the number of transactions were 532 thousand which is almost 50% reduction. Surprisingly though the average property price still remains at the same level of £343,000.

2020 property sales transaction graph

Top counties which are least affected based on the number of transactions (January to July) compared to 2019 are:

Least impacted areas

Average decline in number of transactions in England and Wales are approximately 50% where are for these counties, the fall is between 57% and 67%

The most impacted counties are:

Most impacted areas

 

In these counties, the fall in number of transactions are between 40% to 44%
By looking at these numbers, it seems the fall in the number of transactions is simply due to the lockdown and inability of people to complete the transactions. Typically, the property prices tend to fall if the demand is less than supply. Since this decline is not due to lesser demand, you can see the average property prices are still at the same level compared to 2019. However there could be some drop in the demand in near future due to number of job losses and if there is a second lockdown. We need to wait and watch.

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