How has Coronavirus affected the UK property Market?
Earlier this year the UK property market forecast 2020 was looking up. With the resolution of Brexit in sight, experts predicted a ‘buoyant’ spring. Then Covid-19 happened.
We know how the rest of the story goes.
If you wondered how coronavirus will affect property prices, then read on for the full analysis from Mortgage Squared and learn how the housing market is starting to bounce back.
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Over the lockdown, we were all honing our baking skills, Zooming left, right and center and adapting to the ‘new normal’, as we waited for the easing of lockdown. Then on 14th May, we heard the housing market news we have been waiting for. Public house viewings could return, with new safety measures in place. These included restricted numbers of people attending viewings, no more ‘open-houses’, and for homeowners to vacate the property during viewings.
Rightmove said that traffic to its property website returned to pre-lockdown figures with 5.2 million visitors. This was an uplift of 4 per cent on the previous year. In the subsequent week, a reported 11,000 new properties were listed for sale.
As many of us remain hopeful that the market will slowly regain momentum, we’re also aware that this will take time to return to pre-coronavirus levels.
Ultimately though, people need to move house for a whole host of reasons. Be it for relocating, expanding families, for work, or just for a change. This is particularly true of those aged 18 to 30 year’s old, who move on average three of four times during this age.
There is another important factor, one you’re probably familiar with by now – remote working. Due to the coronavirus pandemic, 60% of people were working from home. Some still haven’t gone back to their offices. As a result, we may see people looking to upsize to properties with home offices in the future.
Other studies suggest that 15 per cent of people are considering moving house due to life in lockdown. A further 34 per cent state that they feel differently about their home since Covid-19. Such as the importance of a garden or the need for more space. While the market may have been slow in the short-term, there’s plenty of reasons to believe that long-term, it will bounce back.
Housing market coronavirus impact
It may be too soon to predict the impact of coronavirus on UK property prices, but the UK Land Registry figures are a useful indicator.
Although their data only runs until March 2020, it shows that the average house price in the UK was £231,855 at that time. It also reveals that property prices dropped by 0.2 per cent on the previous month. Although in good news, this had risen by 2.1 per cent compared to the previous year.
More recently, data from Nationwide, found that the average house prices dropped by 1.7 per cent in May compared to the previous month, with the latest average UK property price valued at £218,902.
But in keeping with the positive vibes, the housing market, and our team at Mortgage Squared remains optimistic.
In their latest report, Robert Gardner, Nationwide’s Chief Economist, said that the policies put in place by the government to support the economy have helped limit damage. As we all know, these included furlough schemes and other financial support, which helped to keep borrowing costs down.
Then we had the introduction of the Stamp Duty changes. If you’re buying a home in England or Northern Ireland, you will now pay a reduced rate of Stamp Duty Land Tax (SDLT) until 31 March 2021. You will pay no Stamp Duty if the amount you pay for your main home is under £500,000. If you’re purchasing additional properties, you will still have to pay an extra 3% in Stamp Duty on top of the revised rates for each band.
The long-term outlook – Is Coronavirus making a come back?
As you’d expect, a snapshot of UK property prices right now shows the dent that coronavirus has made. We won’t be able to see the full picture until we pull data from the end of this year. With what looks like another wave approaching all this great work could be undone.
However, there are many reasons to be optimistic. As we know, things can change quickly, and once we return to the ‘new normal’, it’s expected for demand to return with property prices reflecting this. If you really think about it people will always buy and sell properties. It may slow down again but with the current changes it has given people more of a drive to carry on with their decision.
If you are looking for Mortgage advice, then please give our friendly team a call – 08081551807.