Impact of Covid-19 on the Housing Market
Only a few months ago, all the talk was on the potential impact of Brexit on the housing market, then along came the unexpected coronavirus pandemic and changed things yet again. Covid-19 and the lockdown has inevitably played havoc with all areas of life and that includes the housing market. We take a look at the property situation before, during and after coronavirus and the likely impact that Covid-19 will have on the housing market.
The housing market prior to Covid-19
During the first few months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Thanks to factors such as robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election of 2019, property market activity level and price growth were edging up. The housing market was showing signs of prosperity and the outlook for the year looked positive.
Figures from the Nationwide House Price Index report released in March 2020 (and based on data gathered pre-pandemic) show that house prices had continued to rise since the start of 2020. In fact, the annual growth was the highest seen since January 2018 and the last six months had all seen month-on-month increases, even after taking into account seasonal effects. Things were looking good.
The housing market during Covid-19
As a result of the UK government’s response to control the spread of the virus, the lockdown is inevitably affecting the housing market. The current conditions are proving to be a difficult time for estate agents as most sales have come to a sudden halt. Those selling off-plan properties are perhaps better placed, as their business model inevitably relies on purchases being made well in advance of actual moves occurring.
It’s currently tricky to gauge exactly what the housing market trends and activity will be over the coming months and whether or not it will bounce back quickly. It is expected that the number of house sales in the UK will suffer a drop this year, as the coronavirus pandemic has stopped movement and sales.
But it’s not all doom and gloom though, as the government have put packages in place to help the property market recover after Covid-19, which is an encouraging prospect.
The post-coronavirus future for the housing market
As far as the future of the housing market goes, according to global property consultancy firm, Knight Frank, house prices are predicted to fall by only 3% and will rebound in 2021.
It’s hoped that when the restrictions ease, not too much long-lasting damage will have been caused by Covid-19 and that activity can get back to normal.
There are worries that the pandemic could trigger a recession, but Capital Economics suggest that the Covid-19 pandemic will have a short and sharp effect on the economy. This lies in comparison to the recession of 2008 which had a more prolonged impact.
What is interesting to see is that property sales in China seem to have almost returned to normal levels now, despite their lockdown, so perhaps this could be a form of indication as to how we’ll fare in the UK.
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