Will COVID affect property prices?

The UK property market has all but ground to a halt during the coronavirus outbreak, but to what degree will the property prices be affected by this slowdown? In this article, we take a look at what’s happened to the property market so far this year and offer advice on how the fight against COVID-19 could affect the value of UK homes.

The property market in 2020

At VitalSpace, the 2020 property market started with a boom with record numbers of viewings and offers being received during the first 3 months of the year. Optimism briefly returned to the property market following the uncertainty of Brexit in 2019, many house-hunters saw 2020 as the time to make that all important move and purchase a new home. A positive momentum had certainly developed in the South Manchester market with property prices increasing, but with coronavirus impacting the whole economy, concerns are being raised surrounding how the property prices will be effected and should you buy or sell a property in the coming months.

I think it’s fair to say that the traditional “spring selling season” has turned into a period of extended hibernation as the government’s measures to limit the spread of coronavirus has put the market into lockdown. Government advice means estate agents, prospective buyers and surveyors are restricted from making home visits, property viewings as well as the physical surveys essential before buying a new home.

How has Covid-19 effect the market?

I think it’s fair to say that transaction number are most certainly going to be effected with many of our sales being “parked” with legals in place until surveys can be conducted once the lockdown restrictions are removed. With the “stay-at-home” measures in place, physical surveys are forbidden, but buyers and sellers wishing to get a move under way are instructing ourselves, solicitors, and speaking to our finance advisor to discuss mortgages, in anticipation of the restrictions lifting.

Mark Hayward of NAEA Propertymark, a trade body for estate agents commented:

“Estate agents will need to operate differently, and buyers and sellers must adopt a ‘pragmatic and planned approach’.

Typically spring would be the time to see an influx of properties coming to the market, but this may be restricted in the short and long term. As the current situation continues to evolve, it’s likely more agents will move to virtual viewings.

At VitalSpace we listed a number of properties in the week running up to Lockdown and have only placed them to our website until things return to some degree of normality. Many of our property also benefit from our immersive 4K virtual tours. With the current demand for property remains strong, enquiries and new instructions are being received daily pointing towards an active market once lockdown restrictions are removed.

How will Covid-19 effect property prices after lockdown?

It’s really too early to say exactly what impact the outbreak will have on the property prices, but they are likely to mirror the rest of the economy. In the short-term, property price growth will stagnate as there will be fewer transactions going through. But as we saw with Brexit, the UK property market is exceptionally robust, so it’s highly unlikely that property prices will crash in the coming months.

Estate agent Savills predicts a property price fall of between 5 and 10 per cent in the short term, with prices cushioned by low interest rates and lenders’ forbearance on arrears, which reduces forced selling. Others predict steeper falls and the longer term impact on prices is likely to depend heavily on economic factors such as growth, earnings and unemployment.

Knight Frank forecasts that property prices will fall by 3% this year, but then bounce back by 5% in 2021, in line with its predictions around the economy as a whole shrinking this year.

Only once the lockdown is lifted will we start to get any sense of the impact on pricing. One of the most important indicators will be how quickly sales agree and the level of demand when compared to earlier in the year.

Our current expectation is that pricing levels will largely pick up from where they left off at the start of March 2020.

Why not give us a call?

It’s a waiting game to ultimately see how the housing market as a whole will be impacted, but as your local estate agent we are committed to keeping you updated with developments. During lockdown, we are still open and here to help. Why not contact us for help or advice.

During lockdown, we have experienced a number of sellers instructing ourselves to market their properties once lockdown measures are removed. Many people are keen to use this period to prepare for moving later on in the year. Why not contact us for an informal chat to discuss our selling service.