With people unable to leave their homes and any planned moves being put on hold, the corona virus lockdown has essentially hit the pause button on the UK housing market. There is much speculation about the longterm impact this will have on the buying and selling of houses in the UK.
Experts are predicting a 38% decrease in house sales this year compared to 2019. This means sales will drop to around 734,000 in 2020, down from 1.175 million the previous year. Alongside a drop in sales, a slight price reduction is also expected. Property consultancy, Knight Frank, believes the drop will be around 3% across the country, excluding central London, where prices are expected to remain unchanged.
However, forecasters have been keen to point out that everything depends upon how long the lockdown will last. Currently, predictions are based on the lockdown lasting throughout April and May and then being slowly lifted in June. Should the government decide it necessary to extend the lockdown then predictions will need to be revised and mostly likely they will get worse the longer the lockdown continues.
Prior to the lockdown, the UK housing market had been witnessing positive movement following the election in December. With the Brexit question somewhat answered, buyers and sellers had begun to act in January and February. The question remains as to how and when the UK housing market will return to pre-corona conditions. In particular, there is concern among estate agents about how to carry out viewings in a safe way.
It has been suggested that three things are necessary to reboot the UK housing market after the lockdown ends: firstly, a continuation of cheap mortgages, government incentives for first time buyers, and new, safe procedures for carrying out viewings. In response to the third point, it has been suggested that virtual viewings could become more popular with estate agents guiding potential buyers around a property via video call.
Many property buyer groups are estimating that prices will fall by at least 10%.
For those who have already brought a house and are facing mortgage repayments under the new, financially constrained conditions caused by the lockdown, the government has offered a new support scheme that gives homeowners a break of up to three months from their mortgage repayments.
Whatever the precise outcome may be, it is clear that the UK housing market is entering a volatile period. Yet, as we saw with Brexit, the UK housing market is extremely sturdy and capable of weathering adverse conditions more robustly than other areas of the economy.