What impact with coronavirus have on the housing market? We ask the experts

The property market looked like it was bouncing back in 2020, getting off to its strongest start for four years. However, the coronavirus impact on the housing market has bought this crashing down.

Related: Living on a colourful street could add this much to your house price, research reveals

Halifax, in it’s February House Price Index, reported an annual increase in house prices of 2.8 per cent in 2020. However, predicted that coronavirus could pose a potential road bump.

Image credit: David Parmiter

Unfortunately, it’s March House Price Index confirmed that the impact of coronavirus was already being felt. Houseprices, were still found to be 3 per cent higher than this time last year. However, average house prices showed no growth from February.

‘The UK housing market began March with similar trends to previous months, as key market indicators showed a sustained level of buyer and seller activity,’ explained Russell Galley, Managing Director at Halifax. ‘Overall average house prices in the month were little changed from February’s record high, while annual growth nudged up to 3%.’

‘These factors all underlined a positive trajectory and increased momentum in the early part of the year, with confidence rising as political and economic uncertainty eased. However, it’s clear we ended the month in very different territory as a result of the country’s response to the coronavirus pandemic,’ he adds.

‘It’s still too early to properly assess what potential long-term impacts the current lockdown might have on the UK housing market,’ he explains. ‘While there is very significant uncertainty at the moment, much will depend on the length of time it takes for restrictions to be lifted, the pressure that has been exerted on the economy in the meantime and the effect this has on consumer sentiment.’

‘We continue to have confidence in the fundamental strength of the housing market and remain ready and willing to lend on new mortgages, as well as product transfers and further advances, wherever and whenever there is demand,’ Russell Galley adds.

Coronavirus impact on the housing market

Image credit: David Parmiter

Zoopla’s latest UK Cities House Price Index told a similar story, showing that housing demand had already dropped dramatically.

The Price Index revealed that Covid-19 has already led to a 40 per cent drop in demand for housing in the week prior to the lockdown. Fall through of sales have also grown rapidly and are 60 per cent higher than the week before.

It is no surprised that interest from new buyers have fallen dramatically as the UK is placed into lockdown, and the population is told to stay at home. However, sales continue to be agreed, but at a much slower rate with it 4 per cent down on last year.

Due to the knock on affects of the coronavirus on the housing market, Zoopla predicts that newly agreed sales will be down by up to 80 per cent on last year.

Image credit: David Parmiter

However, it isn’t all bad news. Zoopla predicts that while we may see an impact on house sales, it shouldn’t have a direct impact on house prices over the next few months. House prices tend to fall in times of economy stress rather than global impacts. Hopefully Government and lender action to suspend mortgage payments and support business will help stem the number of forced quick sales that could drag house prices down.

Image credit: David Parmiter

‘Covid-19 presents a major new challenge – not just for the housing market but for the UK and global economies,’ explains Richard Donnell, director of research and insight at Zoopla. ‘Fifty years of history shows that external shocks have impacted the housing market to differing degrees, largely down to the scale of direct impact on the UK economy.’

‘The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand and the number of people moving home, which we can see in our latest figures,’ he adds.

Image credit: David Parmiter

‘We do not expect any immediate impact on prices,’ he explains.’ Beyond this, the outlook for house prices largely depends upon how Government’s major package of support for business and households reduces the scale of the economic impact. Low  mortgage rates mean forbearance will remain the preferred choice for lenders, but further Government support in these unique times cannot be ruled out.’

‘The timing of any rebound in housing market activity depends upon when new restrictions are lifted, and the extent to which households and businesses are able to return to a normal way of life.’

However, Founder and CEO of GetAgent.co.uk Colby Short doesn’t think it will be long before we start to see an impact on price growth.

‘Our first glimpse of any Coronavirus related impact on the market seems pretty clear as monthly price growth ground to a halt in March, despite the pandemic only taking hold in the final week,’ explains Colby. ‘While still up notably compared to the Brexit blighted market conditions of last year, a sudden freeze in market activity of this proportion will start to impact price growth notably as the months go on.’

‘The silver lining, at least, is that home buyer and seller sentiment remains strong and the resilience of the UK property market should bring a swift recovery once normality does finally return,’ he adds.

Related: Zoopla predicts these cities will see the biggest rise in house prices in 2020

All we can do is stay inside and make sure we are following Government advice to help us return to normal life as soon as possible.

The post What impact with coronavirus have on the housing market? We ask the experts appeared first on Ideal Home.

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