The sun is shining, which is usually a cue for the housing market to warm up each year, but home sales remain in deep freeze. People are not going out, let alone inviting strangers into their homes for viewing.
Estate agents have shut up shop for the duration – but what about our own moving plans?
At Continuum we are looking at what is really going on, and whether the housing market really will suffer.
Growth cut short
Nationwide Building Society issued its monthly house price index showing a more than £3,000 surge in the average price of a home in Britain in March, the fastest pace for two years. But it prefaced the information by observing that the figures were from before the lockdown and that housing market activity is now slowing.
One of the first reassessments of the property market has come from global property consultancy Knight Frank. Their view is that the number of house sales in the UK would reduce from 1,175,000 last year to just 734,000 this year.
This could have impact for estate agents and other firms in the property chain, from valuers and conveyancers to removals companies that rely on transactions for their business.
But it might not have anything like the same impact on houseowners – or buyers.
The Knight Frank team is not predicting a collapse in house prices, noting that after the confusion and lack of confidence that had been endemic during the Brexit uncertainty, they were starting to revive in the early part of 2020.
Before coronavirus took hold, house prices were heading up. The market was supported by low interest rates and stimulated by the pent-up pressure of would be buyers who had put off any move until they had some certainty on the direction Brexit would take.
But the coronavirus crisis has pinched off the market recovery.
But no collapse
But – dramatic and even frightening as it is – this will not last forever. With people already going back to work in China, it is to be hoped that normality could start to return in a matter of months.
What will happen when the estate agents take the shutters off their doors, and are back in the business of showing people around desirable residences once again?
A lot will depend on the damage to the economy caused by the shutdown. A long shutdown could have effects on personal wealth and the jobs market, and even a short lockdown of a month or two will have an effect on spending power.
Despite this, prices will fall by only 3% in the course of 2020, and could rebound next year, at least according to Knight Frank.
Its experts predicted that mainstream UK house prices would fall 3% this year but then bounce back by 5% in 2021. Behind these forecasts is an assumption that the British economy will shrink by 4% in 2020 before growing by 4.5% next year as the pandemic recedes, and Britain’s economy shakes off the damage and gets back to work.
The factors that were helping the housing market recover its buoyancy will simply reassert themselves, the consultancy believes.
Not all observers are quite so sanguine, and some have suggested that house prices will come under downward pressure from a sharp rise in unemployment and people’s incomes being hit. But the general consensus is that a property Armageddon is not a likely outcome.
What should you do?
Most potential buyers and sellers are simply putting moves on hold, biding their time and will check on market movements in the hope that they can return in the not too distant future.
But it is still possible to buy and sell, even if mortgage lenders have become wary, and now temporarily restricting new mortgages. If you already have a property in mind, you may still be able to take advantage of interest rates that are at their lowest levels for years, and of discounts from developers who are desperate to sell their properties.
Not all lenders have passed on the savings, and you need an expert to be sure that the deal you are getting really is suitable. At Continuum our mortgage specialists can help you secure the most suitable mortgage deal from across the entire market.
Call us now. Not only do we know those lenders who are still lending, we can discuss the options such as fixing your rate now before rates bounce back.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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