Tuesday, July 23, 2024

What does Coronavirus mean for the UK housing market?

The Coronavirus pandemic has had a huge impact on the UK’s economy, not least because during the period of social lockdown many people have been unable to get to work or, in some cases, be economically active at all. This has played its part on the country’s housing sector, too, of course. Both renters and owner-occupiers have seen a significant shift in the way they have had to adapt to meeting mortgage payments and handling rental arrears. However, the crisis comes down to more than the ability to make payments on time. 

In the final analysis, no one can truly say what state the UK’s housing market will be in once the social lockdown is lifted. Several factors will come into play, not least whether or not the pandemic will worsen and further restrictions will be needed down the line. Nevertheless, there are some things we can already say about the shape of the country’s housing market and the likely future effects of it once the crisis has passed.

Buying, Selling and Renting – What Is Allowed?

It’s important to note that the housing market has not come to a complete halt in the UK, and it is still possible for people to market their homes in print and online. You can still visit estate agents’ websites and view places that you might like to buy. Indeed, you could make an offer on a property today and have it accepted. You are not prevented from engaging the service of a solicitor to begin the process of conveyancing for you either. As such, you might think that it is business as usual for homeowners. 

Unfortunately, the rules on social distancing during the lockdown period mean that in-person visits to occupied properties are virtually impossible. Even if the seller could temporarily vacate for you to look around, it would probably be advisable to stay away in any case. This means relying on virtual tours and high-quality photos if you want to market a property successfully, whether you are letting it or selling it.

So, theoretically, you can buy, sell and move but the practical reality is that many people are staying where they are. The good news is that several mortgage lenders are offering temporary mortgage holidays for those who have seen rapid income drops. You will still owe the money but deferrals are being allowed by lots of lenders. Equally, the UK government said that landlords should not seek county court judgements to evict tenants for rent arrears during the crisis. However, renters who were already behind with their payments before it took hold are exempted from this protection. 

Asking Prices and Sales Figures

Because moving is simply not practical for many people at the moment, the number of completed exchanges and completions since the lockdown began is consequently lower than it otherwise would have been. In fairness, many estate agents reported fairly sluggish activity over the course of the last six months or so. As such, asking prices were often highly negotiable and buyers could expect to pay beneath the marketed price as there was not always a great deal of competition. Although places like London have seen falls in housing prices over the last year or so, in other parts of the country the downward trend has been much less marked. 

Now, however, pricing stagnation in many parts of the country has been the norm as most people realise their house won’t sell unless they are remarkably lucky. So, they’ve been tending to hold their price rather than drop it, waiting for the crisis to abate and to see what the market looks like on the other side. In short, there has been no collapse in the UK’s housing market as many predicted there would be.

The Impact of Brexit in the Same Year as Coronavirus

One of the wider reasons that sellers and buyers have been in somewhat of a hold patter is because of the B word; Brexit. It may seem like a distant memory but uncertainty over the issue was already causing some to delay their plans until the economic effects of it were truly understood. So-called no-deal Brexit may be on the cards later this year and if that happens off the back of a struggling UK economy due to coronavirus, then few commentators would predict widespread growth in the market.

A Fast Bounce Back?

It is possible that the UK’s housing market will bounce right back – and could even steam ahead – once the current coronavirus restrictions are lifted. There will be a lot of pent up demand, after all. Some people will be behind on mortgage payments and want to downsize. Others will want to move up on the property ladder before prices start to rise once more. Greater monetary liquidity in the market may also be reasonably expected, thereby creating more attractive mortgage packages. There has never been a crisis like this one, so the return to normality could be just as remarkable as the shift away from it was.

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