The Bank of England says that although estate agents around the UK have told it that there is strong demand from buyers, the housing market faces several headwinds as the economy settles down to the ‘new normal’ after the furlough scheme.
These include only a ‘modest increase’ in properties coming to the market and difficulties in carrying out on-site valuations holding back the mortgage market.
It was also noted that rental markets in some city centres face a potential over-supply of properties as thousands of overseas students stay away from the UK until the crisis is over.
But the bank’s representatives, who report to it on key areas of the UK economy every three months, says estate agents are worried whether the surge in demand can be sustained when Chancellor Rishi Sunak’s furlough scheme begins to wind down later this year.
Contacts were concerned that a rise in unemployment could hamper a recovery in the market,” the report says.
“Prices on the secondary market and for new build homes were reported to be broadly unchanged compared with before the pandemic.”
The Bank of England also reports that the availability of relatively high loan-to-value mortgages has helped keep the market going following the re-opening of the market in mid-May, although the supply of mortgage is still less than before the Covid pandemic started. Also that, “This had prevented some purchases from going through.”
Echoing research issued by many agents in recent weeks, the bank’s agents noted an increase in interest from buyers looking to move out of London, and in properties that are more suitable for home-working.