30 Mar Coronavirus halts the property market bounce back
Just as we were seeing a bounce back in the property market following last year’s general election, things have come grinding to a halt.
Zoopla Cities House Price Index Report revealed that demand from buyers over the seven days to 22 March was down 40% on the previous week. It predicts housing transactions will fall by up to 60% over the next three months.
“Coronavirus presents a major new challenge – not just for the housing market but for the UK and global economies. 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,” said Richard Donnell, Director of Research and Insight at Zoopla.
People advised not to move house
The government is now advising people not to move house in a bid to try to limit the spread of coronavirus. They urge buyers and renters to delay moving while current emergency stay-at-home measures are in place.
There are some reports that banks would like a full suspension of the UK housing market with lenders worried at how the pandemic will impact valuations. There’s also concern over agreeing mortgages in a period of such economic insecurity.
Government advice states: “There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times…we urge parties involved in home moving to adapt and be flexible to alter their usual processes.”
No viewings or valuations
Current restrictions mean that no viewings or valuations are allowed although you are able to speak to estate agents on the phone and conducts virtual viewings. This means there will be hardly any new transactions undertaken once the current pending completions have taken place.
The government has stated, “You can speak to estate agents over the phone, and they will be able to give you general advice about the local property market and handle certain matters remotely, but they will not be able to start actively marketing your home in the usual manner.”
David Hollingworth, director at broker L & C Mortgages, said “The purchase market will effectively go into cold storage. You’re just not able to go out and buy a house even if the vendor wanted you to come around.”
A strong start to the year
All of this comes after the UK property market had its strongest start for four years in January and February 2020. The 20 cities tracked in the House Price Index saw on average +1.6% annual growth.
The general consensus is that the full extent of the property market downturn will rest on how effective government implementations are to support jobs and the economy.