Helpful Expert Opinions on Covid-19 and the UK Housing Market
Although lockdown measures in the UK have been slightly lifted, the effects of Covid-19 are still prominent. But what does this mean for the British housing market?
Last week, the housing market was finally given the green light to reopen following the government’s announcement that stated the ban on property viewings and valuations taking place would be lifted.
After seven weeks of enforced working from home and strict social distancing due to Covid-19, estate agents can now return to work with new measures in place to begin nursing the housing market back to life. And already experts in the industry have reported a huge spike in demand, with buyers and vendors desperate to get their deals moving again.
So what do housing market experts believe will happen post-Covid-19?
Savills is sticking with its previously forecasted prediction that house prices will increase by 15 per cent over the next five years.
Mortgages for Business sales director Jeni Browne believes prices are likely to drop between 5 and 15 per cent, with significant regional variation. However, she feels the downturn will be short-lived
“Due to the physical restrictions put in place by the government and the financial impact on people’s lives, I am expecting a temporary drop in house prices for a period of up to six months, with a recovery by the end of the year,” she says.
“There is a significant amount of pent-up demand in the housing market because potential buyers and sellers held off last year due to the uncertainty that Brexit and the general election created. We experienced the start of the Boris Bounce in early 2020, where the market picked up significantly only to be restrained again by Covid-19.
“As such, I would expect this demand to return as soon as it is safe for people to start moving. Any reduction in rent during this period will be minor.”
From the perspective of Altura Mortgage Finance managing director Rob Gill, the more optimistic end of Savills’ forecast is the most probable outcome.
He says: “With the housing market effectively frozen and little prospect of forced sellers due to government action, our prediction for house prices in 2020 is a relatively modest decline of 5 per cent.
“This may simply be a case, however, of kicking the can into 2021, when the authorities will run out of firepower and the true extent of damage to the economy will be revealed.”
OpenMoney head of mortgages James Brocklebank shares a similar outlook to Gill’s. He says: “While housing transactions have dramatically deteriorated as the market ground to a virtual standstill, I do not believe the overall house-price decrease will be anything near the 13 per cent predicted by the CEBR.
“It is more likely to be in the region of 5 per cent. This is for one primary reason: despite the pandemic causing a seemingly catastrophic stagnation in the short term, the fundamentals of the housing market remain the same. There is not enough property being built for the people who want a home and, if anything, the current situation will exacerbate the problem.
“Before the pandemic, employment was at its highest for many years and interest rates were incredibly low; so, as you would expect, the market was in a very good place.”
Brocklebank predicts the market will bounce back in 2021 and is hopeful the government will extend Help to Buy. He is also optimistic that ministers will bring forward their proposed First Homes scheme, offering discounts to people buying in their local area, which would be another boost for the industry.