Ironically, before the coronavirus hit, the housing market was in rude health. The much anticipated Boris Bounce meant prices were rising across the board. According to Nationwide, annual house price growth hit 3% in March, up from 2.3% the previous month - the fastest pace since January 2018. And, after five difficult years, Prime Central London, including Marylebone, Mayfair, Hyde Park and Regent’s Park, was also showing signs of a significant upturn. Asking prices on Rightmove were up 5.1%, year on year. Coronavirus lockdown has since made a nonsense of those figures, with the market, of necessity, frozen and most agencies temporarily shutting their doors and working from home. So what next?
The truth is, no-one knows. We are in completely uncharted territory. There is general agreement there will be some serious effects in the very short term, but how quickly will we recover? Most commentators are praising the government’s rapid response to the crisis (testing aside) and it is hoped it may significantly shorten the dip. For the housing market, those measures included mortgage holidays for homeowners and landlords and extra protection for tenants. The other unanswerable question, though, is how long we will be locked down - the longer it goes on, the greater the damage.
So what are the various industry insiders saying about housing? Knight Frank, one of the larger estate agents, believes, as a result of the lockdown, sales volumes will be cut by over a third this year. They do not, however, expect prices to crash, instead, reducing by a relatively modest 3% in 2020 and then rising by 5% next year. In London, they are predicting prices to remain flat for 2020 and then go up by 3% in 2021.
Another of the chains, Savills, are expecting a larger fall in sales volumes - somewhere between 38% and 53% but then a full recovery by May 2021. They are predicting prices may come down by around 5%-10% in the very short-term but that’s on the back of some very low transaction levels. In Prime Central London, they believe price falls will continue to slow and that there will be a return to growth for areas just outside it.
Richard Donnell, of property portal, Zoopla, says:
‘We do not expect any immediate impact on prices. Beyond the next few months, the outlook largely depends on how the government’s package of support for businesses and households reduces the scale of the economic impact. The timing of any rebound in housing market activity depends on when the new restrictions are lifted and to what extent households and businesses are able to return to a normal way of life.’
There is also the issue of pent-up demand. There was plenty of it being released onto the market in the aftermath of Boris Johnson’s election victory and there will be even more after several months of lockdown. Not forgetting, births, deaths and divorces will carry on regardless, ensuring there will always be movement in the housing market. Our priorities might change a little though, and in a few unexpected areas, too, such as increased demand for outside spaces and home offices. However, Trying to make meaningful forecasts for houses prices and transaction volumes in the months ahead is almost impossible. Instead, we’ll just have to wait and see how it all pans out.
HOUSE PRICES AND STATISTICS
As mentioned earlier, the property indices figures for March are largely irrelevant, but here they are:
Nationwide: Mar: Avge. price £ 219,583. Monthly change +0.8%. Annual change +3.0%
Halifax: Feb. Avge. price £ 240,677. Monthly change +0.3%. Annual change +2.8%
Land Registry: Jan: Avge. price £231,185. Monthly change -1.1%. Annual change +1.3%
Hometrack UK 20 City Index: Feb: Avge. price £255,400. Quarterly change +0.3%. Annual change +1.6%
Rightmove: Mar: Avge. price £ 312,625. Monthly change +1.0%. Annual change +3.5% (asking prices on Rightmove)
Average prices in (source: Rightmove)
Hyde Park £1,456,535
Regent’s Park £1,838,526