COVID-19: Impact on the UK Housing Market

10/04/20

Reports emerging from the UK housing market reveal a two-fifths reduction in demand, while researchers predict that the next three months will witness a 60% reduction of sales in the housing sector. The coronavirus pandemic has crippled the health of industries and sectors across the world, and the UK housing market is certainly no exception.
Research reveals that the next six months will witness a decline in sales transactions, given the strict restrictions on social gatherings and movement. As people confine themselves indoor and restrict social contact, the housing market has entered a period of limbo. Property experts reveal that the exact impact on housing prices is yet to be determined as the economic impact and countermeasures deployed by the UK government become clearer.

Declining Demand & Consumer Confidence

The UK property and housing market have witnessed an unprecedented impact in the wake of the global pandemic. Naturally, the need for social distancing has put an end to all property valuations, open houses and appraisals, which are crucial steps while selling or buying a home.
Zoopla, one of the leading UK property resources, revealed that the number of people searching for houses and properties online has witnessed a sharp decline. As per Zoopla’s recent Cities Index, the last few days of March witnessed a 40% decline in the demand for housing. Experts observe that the economic shocks and social distancing regulations have crippled consumer confidence, and therefore, demand is expected to reduce further.

Research reveals that the next six months will witness a decline in sales transactions, given the strict restrictions on social gatherings and movement.

Lenders in Lockdown

In the wake of the pandemic, lenders are combatting the rising demand from borrowers who seek to take a holiday from their mortgage payment schedules. Many popular lenders, including the Lloyds Banking Group and Barclays, extracted several of their mortgage deals last month in a bid to reduce the volume of rising demands.
A clear majority of the biggest mortgage processing lending institutions have been shut down, while their staff is wrestling to process millions of pounds worth of mortgage applications as they work from home. Lenders across the UK and the entire world have gone into lockdown, much like the rest of the population.

UK Government Hits Pause

The UK government has made an official decision to hit pause on the entire housing market to avoid the possibility of a crash in the housing prices. Given the impediments created by the coronavirus lockdown in undertaking appraisals and valuations, and other phases of the buying and selling process, pausing the entire market appears to be a pragmatic decision.
Instead of outright forbidding property sales and transactions, the UK government is encouraging buyers and sellers to delay their property transactions if possible. Meanwhile, the lenders have also been urged to put all mortgage applications on hold. People are being urged to not only pause their transactions but also postpone their dates for moving into their new homes if necessary.

During the last financial crisis, we witnessed quite a lot of distressed property owners and observing the trends today I suggest Post COVID-19 will be the time to go hunting because there will be opportunities.

Outcome During and Post COVID-19

It is challenging, however, We have found most agencies using more innovative ways to market and sell properties. While some Agency remains shut, The others are still working remotely with contingency plans set up to be able to communicate with their prospective buyers, tenants, vendors, lenders, solicitors etc.

Virtual Tours-Welcome to the world of Virtual Viewings. Like everyone else, real estate agents are adapting to a new reality. Some agents are now doing virtual open house tours, video tours, virtual tours etc, to adapt to the ever-changing market with the hope to generate a sale.

Ultimately people need a place to live and whilst the COVID19 crisis is temporary most buyers are becoming receptive, adjusting and adaptive.

Following the further base rate reduction from 0.25% to 0.1% most buyers believe it is the right time to buy and take advantage of the reduced rates.

It might seem a bit soon to be talking about the recovery but the COVID-19 pandemic has left no industry untouched. Most tenants would have struggled to pay their rent over the last few months. Which means some landlords are going to struggle with their mortgages, which means an opportunity for some property investors.

During the last financial crisis, we witnessed quite a lot of distressed property owners and observing the trends today I suggest Post COVID-19 will be the time to go hunting because there will be opportunities.

Let’s see what happens for the next months, Some are optimistic as the most transaction continues while some agent says there will be a build-up of demand toward the end of the year towards the next year 2021 due to suppressed transaction activity.

We will be happy to help you acquire a new luxurious home

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