As we reach the end of July, the property market is continuing its slow emergence from the lockdown deep-freeze. But progress remains tentative amid the uncertain environment.
Across England, the stamp duty cut and easing of restrictions drove an initial spike in demand last month. However, supply shortages are constraining sales volumes from rebounding significantly so far. Transaction levels remain around 45% below the same period last year.
In London, the bounce in activity appears muted as buyers remain wary despite price drops. Values fell another 1.8% in the capital in July as the recession bites. Prime central London has been hit especially hard, seeing a 42% annual decline in transactions.
South of London, areas like Surrey have seen demand pick up more strongly following the stamp duty changes. More spacious properties with gardens are attracting interest here post-lockdown.
In the Essex region, new sales agreed in July rose around 30% from June as pent-up demand is unlocked. But prices are still under pressure with declines of 1.2% month-on-month. Construction also remains well below capacity.
The buy-to-let market also faces ongoing challenges, especially for HMOs. Rental demand has weakened with lower immigration and more tenants returning home. Investors are cautious about purchasing properties until student and workforce inflows improve.
On the positive side, mortgage availability has improved and rates stay near all-time lows to support buyers. But furlough reductions may soon test budgets for many.
While the market has stepped up from an almost complete standstill, this looks likely to be a prolonged, uneven recovery. The economic scars left by the pandemic seem set to weigh on sentiment for an extended period.
In summary, July saw the property market splutter slowly back into life after months of inactivity. But with recession looming, the road ahead still looks bumpy and unclear. For now, we must take the positives where we can find them.
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