Housing Markets Remain Strong In US And EU, But Pandemic Clouds The Horizon

Mortgage applications and approvals have soared to their highest levels in years, indicating that for now, the UK’s housing market remains strong.

The housing market had cratered early on in the pandemic due to restrictions on home showings and moving, and experts say that its recovery likely won’t last. As added unemployment assistance and tax incentives from the government wear off the number of buyers may dwindle.

The U.S. is seeing similar trends, with the redistribution of business and working from home causing many urban residents to seek less crowded areas.

The latest data comes from the mortgage group Halifax and the Bank of England. Mortgage applications and approvals are the highest they’ve been in 12 years despite an economy that is floundering overall. Russell Galley, managing director of Halifax, told the Guardian he attributes the rise to working from home and government incentives.

“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May,” he said. “There has been a fundamental shift in demand from buyers brought about by the structural effects of increased homeworking and a desire for more space, while the [tax] holiday is incentivizing vendors and buyers to close deals at pace before the break ends next March.”

The temporary nature of that tax holiday, along with uncertainty over unemployment numbers, has some banks hedging their bets.

“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic,” Galley told the Guardian, “Therefore, while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead.”

Things are just as uncertain across the Atlantic. U.S. real estate agents have seen a massive influx of residents hoping to move into cheaper suburbs or smaller cities as physical presence is no longer necessary for many jobs.

If the pandemic eases, however, or if stimulus bills remain gridlocked in Congress, moving away into a property with more space in America may no longer be as attractive.

Professional mover Bobby Burke, in California, told LinkedIn: "I'm getting people in their 20s who've lost their jobs and are moving back to their parents'. I'm getting families with small children who are tired of California's high cost of living. They can work from home now – which means anywhere."