The Government announced new regulations that lifted the seven weeks freeze on property viewings and home moves. This has understandably left many people with the question – what effect post lockdown will have on the English property market?
Property website Zoopla previously estimated that about 373,000 property sales had been put on hold due to lockdown – with a total value of 82bn. As a result, there are many predictions that the UK property prices will fall dramatically but in comparison many people believe that we may infact see growth in the market. This is due to a combination of pent up demand and freely available mortgages at low rates.
Economists and housing experts are forecasting UK-wide price falls of up to 13%, which are predicted to be due to a number of factors such as; falling incomes and loss of jobs, lack of confidence and a general lack of transactions. In comparison, estate agent Savills has predicted the hit to the market to be more like 5% and a third of valuation surveyors predicting 4% or less.
However, the housing market commentator has said that it is particularly difficult to predict whether house prices will fall and by how much because the nature of the current crisis is different to previous downturns we’ve seen, being caused by global health, rather than economic circumstances.
The 2008 property crash is very much different from our current crisis and this is because the price crash was caused by tough restrictions on borrowing. This combined with higher interest rates meant that there was more negative equity and a greater number of repossessions – subsequently causing house prices to fall.
It is therefore hard to predict what exact effect post lockdown will have on the UK property market as we are in very much uncertain territory.
Whether the current market fall will be 13% or 4% due to the unprecedented times we are currently facing; the result of lockdown will more than likely have a profound effect on both our economy and the UK property market.
It should be mentioned, however, this could be good news for first time buyers and property investors as the post lockdown market is being described as a ‘buyer’s market’. Due to the uncertainty and lack of finances, sellers will be more than willing for a quick sale allowing first time buyers and investors the opportunity to take advantage of reduced sale prices.
At the moment the Bank of England base rate is the lowest it has ever been at 0.1%, so as long as lenders continue lending with low deposits at the current rates, then homeowners are more likely to be able to afford their housing costs and buyers can access money to buy.
If you have any queries regarding a property transaction please get in touch with a member of our Property Department on 01234 350244.