While the UK property market was showing signs of growth just a month ago, the coronavirus pandemic has tanked sales across the country. With sales down 77% across the nation, there likely won’t be any recovery in the foreseeable future.
Fear Inhibiting Sales
With the pandemic raging and the government recommending that people stay home, many are delaying moves. Even entirely online estate agencies are seeing less demand. Doorsteps.co.uk is seeing 40% fewer sales and viewings on a week-by-week basis. People who rent their homes are also less likely to move, meaning that the rising demand for both rentals and new homes for purchase will drop. Estate agents will be seeing less business, though a fully virtual experience through their estate agent software might help alleviate fears of infection and draw in buyers.
Financial Woes
With the hit to the global economy, property prices will likely take a modest hit in the near future. While government regulation may help reduce the damage, the predictions from November 2019 likely won’t hold perfectly. With good regulation, it might be redistributed. Given the tie between rental prices and income, rental prices may take a hit thanks to how many may lose their jobs. Given that many people had made career moves because of positive economic predictions, these people will also be hard-pressed to make rent or house payments.
Mortgage Offers Extended
One effort already in place to help take the pressure off of buyers is the option to extend their mortgage offer up to three months. This gives home buyers the option to push back their moves without having to reapply for a mortgage. The government currently recommends putting off moves, even if a sale is completed. Mortgage payments can also be postponed for any time suffering from the virus.
A Hit to Ultra-High Net Worth Individuals
With the hit to the global economy, those with the most wealth will be taking a hit. Stock markets taking a hit and a potential global recession mean that those with a high net worth thanks to investments will likely take a hit. High-value properties like those in Prime Central London will take a hit in value. Anyone who can buy when prices are at the lowest will see a huge profit if they hold onto their properties. Anyone buying in US dollars will also see a nice discount given how weak the pound sterling has been.
Development Slowing
Some housebuilders have already suspended construction, with more likely to follow. New build sales and housing delivery will take hits until construction can pick up again. Depending on if newly built home demand returns, we may see builders converting sites to affordable housing with grant support. While demand is predicted to return to normal after a short hit, land supply may become an issue. Resources have been diverted from planning and some areas have said they won’t register new planning applications until the crisis is resolved.
The Bottom Line
While the global COVID-19 pandemic will cause an economic hit in the short term, things should recover quickly given how rapidly the government is responding. With additional regulations, the economy is likely to not face another recession. However, if it takes longer to resolve the crisis and lift restrictions, a recession is possible. Anyone in the housing market will be seeing a hit, though those with fully online offerings might see some business. Any estate agents should be sure their estate agent software offers remote options for showings. Other people in the industry should consider the same.