Will House Prices Fall After Coronavirus?
The outbreak of the Covid-19 pandemic brought the housing marketing to a grinding halt, as the government restrictions ease, find out how the housing market is fairing up.
Since lockdown measures have been introduced meaning that buyers, sellers, estate agents and surveyors were restricted from visiting properties.
It is estimated that £82 billion of sales were put on hold.
Now as the country is opening and many are looking to buy and sell their homes, it is important to take a look at the current standing of the housing market.
It is estimated that UK house prices may take a 10% hit in 2020 due to the outbreak.
Whether you are looking to buy your first flat or are selling your family home, this article will help you find out how potential house prices fall could affect you.
The Housing Market before the Covid-19 Pandemic
After the initial uncertainty caused by the Brexit, the UK housing market was beginning to show growth.
It was estimated that there were 11% increases in house prices in the UK in the 40 months following the EU referendum.
While some areas, especially London, saw small decreases, the market remained remarkedly robust.
The 2019 election undoubtedly gave buyers and sellers cause for caution.
However, the victory of the Conservative Party and the subsequent ‘Boris Bounce’ in December 2019 left experts predicting a strong start for the housing market in 2020.
The Covid-19 economy
Lockdown and social distancing measures have led to a large reduction in business across the UK.
With most confined to our houses, there has been a reduction in the need for goods and services.
Businesses have closed their stores and many employees are on furlough.
Centre for Economics and Business Research (CEBR) has estimated that Covid-19 has stricken the economy by a staggering 31%.
House Prices Now
Nationwide confirmed that in May 2020 house prices fell by the fastest rate since the financial crisis of 2009.
with rising levels of uncertainty from sellers and falling incomes from buyers the market has hit a stalemate.
With no confirmation of when the country will return to business, as usual, this grim outlook is unlikely to improve.
In fact, the CEBR is estimating that UK house prices will fall by 13% by the end of 2020.
This could mean that house prices fall by an average of £30,000.
A decrease of this size would take the average property price below £200,000.
Areas with predominantly manufacturing, retail, hospitality and construction industries are likely to be hit worse due to social distancing measures.
Predicting Future House Prices
Estate agents, Knight Frank, have predicted that the UK market will bounce back next year, despite house prices falling throughout 2020.
They have forecast that the housing market will see a 5% increase in 2021.
Savills has presented two separate projections, dependant on the outcome of the coronavirus, both predict that house prices fall in 2020.
The first suggests a 5% decrease this year and the same increase in 2021.
The second, more severe prediction, indicates a 10% decrease this year and a subsequent 4% increase in 2021.
Lloyds Banking group have predicted a 2% growth in 2021, following from their forecasted 5% decrease in the housing market throughout 2020.
Zoopla has indicated that those entering the housing market throughout 2020 are likely to exhibit some caution.
Whilst house moves may become more popular initially, with delayed moves being rescheduled, there is likely to be a second dip.
This is in part due to a fall in mortgage choices forcing first-time buyers to take themselves off of the market.
Schemes to Boost the Market
Knight Frank has indicated that the popular Help to Buy scheme may inject some confidence into the market.
The government-backed scheme could give faith to developers to complete projects despite the decline in the market.
Many companies and property specialists are backing a stamp duty holiday, believing that a Government led stimulus package that includes a stamp duty holiday would help to reignite the market.
Stamp duty is paid by all homeowners buying properties valued over £125,000.
Knight Frank and RICS support a stamp duty holiday.
Both say that it could be used as a short-term scheme to boost the property market once the pandemic is over.
It would provide much welcome assistance for those impacted by the economic effects of COVID-19.
Whilst such a scheme would be welcome by buyers, it is unlikely to become active.
This is mostly down to the adverse impact the proposal would have on tax receipts for the Treasury.
Selling your house
Will this help first-time buyers?
If you are looking to capitalise on falling house prices to get your first home, then think again.
If you have a stable job and a healthy deposit, then now is your time to shine.
However, whilst house prices are estimated to fall this has a knock-on effect on the amount of money you are able to lend.
Banks and building societies are less likely to lend to first time buyers in times of economic uncertainty.
This is especially true if you do not have savings.
With the risk of unemployment increasing, first-time buyers may find it harder to get low deposit mortgages.
Lenders are also reducing their loan to value (LTV) mortgages.
These mortgages typically allowed buyers to take out 90%-95% of the mortgage value.
However, as these types of loans are risker for the lenders, their availability is likely to reduce.
With the market reopening, buyers seeking low-deposit mortgages will begin to see a gradual reappearance of these deals in the coming months.
If you have the luxury of a higher deposit, there are a number of good deals on the market.
Listing and Viewing Properties
While house prices fall across the UK, there is some positive news.
Across England, you are now able to put your home on the market.
Estate agents can visit your home to gather the required photographs and videos.
It is important to contact estate agents before they visit your property.
This way you are able to establish what services they are offering and the safety precautions they are taking to best ensure your wellbeing.
If you or any members of your house begin to exhibit symptoms of the coronavirus, you should immediately let the estate agent know and they should not visit the property whilst you are displaying symptoms.
If you are hoping to view a property or are expecting that people will be arriving to view your current property, it is important to note that guidelines for viewings in England were revised on the 13th May.
The changes allow physical viewings to take place provided they observe the government’s public health guidelines and are at a safe distance.
Health and safety standards for viewings:
- All viewings must take place with buyers who are genuinely interested in purchasing the property.
- Initial viewings should be held online. Many different estate agencies are now offering virtual viewings, so be sure to ask your chosen agent if this service is offered.
- All physical viewings should be arranged by appointment.
- Open houses are not currently permitted.
- Prior to your viewing open all windows and doors and where possible leave your property whilst it is in progress.
- All individuals involved in a viewing must wash their hands before the viewing. An area where individuals can wash their hands should be in place, with separate paper towels offered when possible.
- Once the viewing has been completed, homeowners should make sure all surfaces are thoroughly cleaned.
It is clear that safety is of the utmost importance.
By following these guidelines, you are ensuring the highest levels of safety are being upheld.
Estate agents should be happy to work with you to make sure that listing and viewing properties are safe.
Choosing a Removals Company
Whether you are eager to move during the pandemic or are planning to move in the future, understanding the impact that the coronavirus has had on the housing market is essential.
With lots of uncertainty surrounding the housing market, being ready for your upcoming move is key.
COVID-19 has seen the delay of many house moves across the UK.
This highlights the importance of choosing a reliable removals company to conduct your move,
Whether you choose to move now or in the future, it pays to have a flexible removals company that can adapt to this unique situation.
GoodMove are here to help you move safely and stress-free.
We have over 35 years’ experience handling removals throughout the UK and Europe.
Our customer-driven approach to removals has earned us critical acclaim. We believe our written testimonials, which can be found on Reference Line, are our testament to the service we deliver.
We also offer flexible self-storage options to our customers.
Either as part of a tailor-made removals package or as a standalone service.
GoodMove are also offering our new video survey service.
Using this new technology, we are able to gather all the information we require to assist with your move, from the comfort of your home.
Video surveys will help you save valuable time and maintain safety in this unique time.
To find out how GoodMove’s removals service can work for you contact us on the number listed above or use the quick quote form.