The Cities Index Table has always been a good sign of where the property market is going and just before the Coronavirus outbreaks began, the North and Midlands remained in dominant positions across the Index. It would be easy to be overly worried and pessimistic about the direction the market will go in but while the virus has clearly impacted demand, we don’t expect house prices to fall significantly in the short term.
Indeed, government measures to stabilise employment and safeguard incomes, enabling homeowners to keep up with mortgage repayments, should deter a rush of sellers reacting to financial pressure – a trend which does damage house prices during periods of economic shock.
The housing market registered its strongest start in five years in early 2020 and while this has been impacted by the pandemic, it doesn’t necessarily spell a significant problem for the market in the long run. It’s estimated 400,000 home sales have been put on hold so far due to the pandemic as the government have told us all to pause any moves, but people still want to move when this is all over and not all sales are destined to fall through.
Zoopla have described the market as in “suspended animation” which is a better picture than considering it fully closed down or not functioning at all. Many sales may still complete later in the year, with many paused since viewings last took place around 26th March.
Builders Still Building
The Centre for Economics and Business Research (CEBR) has found that construction activity is operating at about 50% of the normal rate. While this is a considerable decrease, in line with the depths of the financial crises in 2009, it still shows activity is taking place, despite lockdown. Their research found more house building than civil engineering or commercial building works, further positive signs for the residential property sector.
Property companies and construction firms are working on the assumption that lockdown will remain in place for most of May, with a gradual reduction in restrictions allowing for more work to build up throughout June and into the rest of the year. Even with this reduction in activity, some companies believe that house prices will hold, with a decrease of just 3% expected by estate agents Knight Frank for example.
Movers Still Moving
Despite being in lockdown people’s lives cannot fully go on hold. Landlords may still be selling properties with tenants in situ and people still plan to move to new areas, new homes and even to different countries. While this cannot happen immediately, it does not mean it will never happen. Demand for housing hasn’t decreased and in particular there has actually been an increase in demand for housing with outdoor space, as people yearn to spend time outside as they can’t visit local green spaces at present.
It is understandable that both those working in the property sector and those who have plans to move or a move in progress are concerned about what might happen next. However, as our team have explained house prices shouldn’t be significantly impacted and everyone is working as hard as they can to offer as many services as possible. Virtual viewings and similar services help to ensure property services can continue as usual and once restrictions are lowered, it shouldn’t be long before we can look towards a healthier and normally functioning market position.