If you’re trying to sell a house or flat right now, it’s a worrying time. As well as the major health fears caused by the coronavirus (Covid-19), the current lockdown has meant it is very far from “business as usual” for the UK housing market.

While some sales transactions are still going through, demand for properties from buyers has dropped by 70% since early March, according to one source.

In this blog, we look at what the coronavirus might mean for house prices in the UK.

Slowdown in the property market?

Has the property market in the UK collapsed? Will I ever be able to sell my house? Will house prices take a big hit because of the coronavirus?

All these questions and more are going through the minds of people selling houses during the current crisis.

While the property market has been largely frozen for now because the government has told people to stay at home, it has not collapsed.

Specialist property website Zoopla has predicted that 70% less homes will be sold in the UK over the next three months.

But some experts think the situation could be even worse than that. Writing in MoneyWeek in March, financial journalist John Stepek said:

“Deals are also going to fall through left, right and centre. Would you move now, unless you absolutely had to? No chance.

There’s another reason the housing market is closed: banks are rapidly shutting down the range of mortgages they offer for new purchases. In effect, unless you can stump up a 40% deposit, you’re going to find it difficult to get a mortgage to buy a house. Even if you really want to go ahead right now.”

According to Money Week, the banks’ caution is partly due to problems in getting enough staff to work due to the global health crisis.

It is also difficult to value a home. Usually, with a healthy market, there will be recent sales of similar properties to compare it with. Now, there will be very few.

Banks are also wary about agreeing mortgages. Many people in the UK and elsewhere have lost their jobs due to coronavirus and businesses have shut down. So banking staff are unable to know exactly how secure a customer’s income is. While many people will hang onto their jobs, more businesses are (sadly) expected to fail in the coming months. And that will mean more unemployment.

House prices “to fall by 13% by the end of the year”

coronavirus

The Daily Express has reported that, on average, £38,000 is expected to be knocked off the value of a typical UK house.

Their article is based on a report by the Centre for Economic and Business Research (CEBR). The report looked at the “economic shock” coronavirus is likely to create. This means the impact the health crisis will have on people’s jobs, businesses, savings and levels of debt.

As with all future predictions, however, note that we won’t know the reality for some time. So, by the autumn, the housing market and house prices could be in a better (or worse) state than shown by reports based on figures from March or April. The stark reality is that we will have to wait to see how much homes are actually worth.

“The pandemic has spiralled Britain into economic chaos, with the government racing against the clock to combat the financial impact of the disease,” said the Express.

The newspaper estimates house prices will take a severe knock as a result of COVID-19.

“Experts have predicted the average house price in the UK will fall by 13 percent by the end of 2020. Hesitancy surrounding the virus has meant the housing market has taken a severe hit and will find it difficult to recover.”

The article also predicted that the CEBR thinks the average British worker will lose 35% of his or her income in the next four months.

“Wait and see” approach after coronavirus

The BBC has also reported on coronavirus and its effect on the housing market. A news article in March said properties were still selling and being newly listed. Until the Government announced new “lock down” restrictions on 23 March.

On that date, the Government urged people not to move house to help slow the sale of the virus, as this BBC story reports.

In a report on 7 April, the BBC reported that house sales had continued since the restrictions “although at much lower levels”. They reported views from Zoopla which suggested people selling their homes had not been taking properties off the market. Rather they were simply hoping things would return to normal.

“The number of homes for sale – per estate agent – is only 1% lower than it was on 7 March,” said the BBC article. This reported Zoopla director Richard Donnell saying: “There has been no mass withdrawal of homes from the market as agents and consumers adopt a wait-and-see approach. The closure of estate agency branches and general uncertainty has resulted in far fewer sales agreed in the last two weeks, with less new supply coming to the market.”

The Guardian also reported very gloomy news concerning UK property. In their article, the newspaper claimed over 520,000 home sales would be abandoned in 2020 due to the virus outbreak.

The newspaper quoted a leading property consultancy predicting a 38% drop in house sales this year, which would have a “ripple effect.” This would also slow property related sectors, hitting retailers, removal companies and DIY firms.

Alternative routes to a quick house sale

We could very well see sellers resorting to one of the many we buy any house for cash companies.

There was more positive news from the Evening Standard Homes & Property report, however. They reported a surge in online activity from home buyers.

Since lockdown, buyers have been taking virtual tours inside homes and around neighbourhoods. They are also using Instagram and You Tube to watch new launches and learn more about investments.

The Evening Standard went on to say “Some first-time buyers are reserving homes having only seen them online. And it could be that when London emerges from this current crisis, the way we buy and sell homes will have changed for good,” said the Evening Standard.

In summary

So, while the property market is depressed now, the situation could change rapidly. How – and when – the government eases the lockdown restrictions will have a direct impact on how quickly the UK housing market start to recover.

What are your thoughts on what will happen to UK house prices? Will the coronavirus ultimately lead to a widespread fall in demand? Let us know by leaving a comment below. We’d love to hear from you.