Just as the UK property market finally appeared to be perking up after the general election result of December 2019, along came Coronavirus. Now, as the country has effectively ground to a halt with businesses closing, and the government’s crackdown on all but essential work and travel, what effect will it all have on the housing market?
A Strong Housing Market in Early 2020
After the election, much of the uncertainty over Brexit was put to rest. Now it was definitely going to happen, and the economic uncertainty of the previous three years began to dissipate. In January 2020, property movements had increased by 12%, and according to the Halifax Building Society, by February, house prices were at an all-time high. Since then, with Covid-19 on the increase, things have taken a downward turn.
Estate agents, removal companies, and others in the industry have locked their offices and are working from home – or not working at all. Social distancing means prospective buyers are reluctant to arrange viewings, and sellers unwilling to allow strangers over the threshold. Government advice is to delay any house purchase and subsequent moves for the time being unless you are moving into an already vacated property.
Many small, and not so small businesses, face an uncertain future. With employees not knowing whether they will have a job to go back to, any thought of moving house and taking on increased debt is being put on the back burner. For those still applying for funding, mortgage lenders are looking long and hard at borrowers’ current and future financial status, before making any decisions. With so much of the country at a stop, how do the experts come up with their market analysis?
Housing Market Analysis
Most valuation analysts take their figures from five sources. The Land Registry, the Nationwide, the Halifax, LSL Acadata, and Rightmove. The Land Registry and LSL Acadata’s figures are based on confirmed sales, but often a month or two out of date. The Halifax and Nationwide base their figures on mortgage approvals, which don’t include the 30% that are cash sales, while Rightmove’s figures are based on sellers asking price. The number crunchers will then use their own algorithms to determine whether, in their opinion, the market is stagnant or buoyant, and whether house prices are increasing or decreasing.
Are House Sales Going up – or down?
Zoopla, the online property advertising company, believes house sales could drop by up to 60% by end of June, while Knight Frank Estate Agency, believes house sales could drop by over 440,000 by the end of 2020. But does this mean the value of your home will substantially decrease? Not necessarily. In fact in certain situations, house prices may well increase. So what do you do if you’re seriously considering selling or buying in these difficult times?
Luckily in this digital age, you don’t have to rely wholly on generalities to obtain an idea of how the housing market is performing. Keeping abreast of national property developments during these trying times can be undertaken using online and national newspapers. However, the picture can often be skewed. Large foreign investment companies buying big commercial properties can make a big difference to the way Land Registry figures are arrived at. Providing false positives as to how the national domestic property market appears to be performing, as well as throwing a spanner into the valuations of domestic properties. Instead, you can get a more accurate local house valuation online, just by adding a few relevant details.
Buying or Selling your Home
Although the latest figures point to a downturn in property inquiries, if you have already found a property, and are reasonably sure you will be little affected financially by the current pandemic, then continue with the purchase. It can take anything from six weeks to six months and longer, to complete and exchange contracts. By then, hopefully, most if not all the current restrictions will have been lifted.
For those in the same situation, but still looking, many estate agents are turning to virtual house tours for prospective buyers. Not the ideal situation we know, but it may give you a head start finding your dream home. Why wait until everyone else is back home-viewing, and prices start to creep up.
Take Note of Local Property Valuations
For the average homeowner, buyer, or seller, take note of local property valuations. These, rather than the national trend, will provide a more accurate picture of how property prices in your area are faring. There are many companies out there that can provide a house valuation online. All you have to do is enter your postcode, some details about yourself and your property, and you’re good to go. The same applies if you want an average price for property in an area you would like to move to.
The UK Housing Market Post-Covid-19
The UK housing market has always been one of supply and demand. Although the big mortgage lenders are doing all they can to reduce hardship for borrowers, after all this is over, it is inevitable that some will have no alternative but to put their property on the market. With an increased supply and reduced demand over the short term, house prices could fall.
However, it’s not all doom and gloom. The last serious pandemic in the UK was the swine flu outbreak of 2009. Although not as impactful as the Coronavirus, by the end of 2009, house prices had increased by over 5%. By March 2010, prices in London were up 15%, and elsewhere had increased by 10%. As this current pandemic comes to an end, although the engine may cough and splutter a little in the short term, there seems no reason why the housing market can’t fully recover within the following 12 months