With the coronavirus pandemic raging, the UK housing market is facing a sudden shift from the bright start of the year. With contracts broken left and right and viewings frozen, many are wondering how the market will play out.
Sellers Not Desperate
While demand has tanked and the market is down, the prices are still very high. Sellers currently aren’t being forced to sell due to financial hardship. This means they may choose to pull listings rather than take a hit on their asking price. These desperate sellers may increase if the crisis continues.
A Seller’s Market
Sellers are much better off than your average buyer. Thanks to years of regulation, the average homeowner has seen an increase in their home’s value that makes it appear on paper that they made more from their property value increases than they did by their salary. While many sellers may want to list now, it isn’t advised due to frozen mortgages and viewings being canceled. Demand is also down but is likely to surge soon.
Transactions Down
60% of “subject to contract” sales have fallen through recently combined with a similar drop in demand. This trend is predicted to continue, with drops in demand as people obey the orders to stay at home. While some deals are being made, hard times may be ahead for those in the industry.
Rental Demand May Rise
With home deals being broken and mortgages falling through, many who need to move home soon may be looking at rentals for the short term. These short leases or month to month rentals will likely be in demand by any who had a home sale fall through thanks to the crisis. Any landlords should be sure their property management software is up to snuff.
New Homes Less Available
With the pause by many major housebuilders, new homes may become less available in the years to come. Depending on the market, some building sites may be converted to affordable housing supported by grants. This will be great for lower-income people but may reduce the supply of new homes and raise prices on the ones that remain.
Landlord Opportunities At Risk
Those who were going to jump into the booming rental markets outside of London may want to hold off. Not only are all mortgages more difficult to obtain, but the pause in moves may hurt them early on. Government regulations may help soon, but for now, a pause is recommended. When the market is open again, those quick to move on or with empty properties ready for renters may see a profit. Good property management software and practices will be key.
How long the pause will last depends almost entirely on government response. While measures to prevent desperation sellers will help in the short term, in the long term job losses may force sales and tank home prices. Moves may also experience a sudden jump once they’re allowed again, so movers and those in the property industry will need to keep an eye on the current situation.