Coronavirus and house prices: what to expect during and after UK lockdown
What will be the relationship between coronavirus and house prices in the coming weeks and months? We examine the available evidence
BY ANNA COTTRELL
If you're a prospective buyer and wondering what will happen with coronavirus and house prices, you're not alone. The UK property market changed almost overnight after the Prime Minister's decision to impose a three-week partial lock down countrywide. If you were hoping to buy and house and take out a mortgage this year, what can you expect from this point onwards?
The first and most visible effect of the lockdown on the property market has not been on house prices, but on property supply and demand. The Zoopla UK Cities House Price Index has recorded a 40 per cent decline in demand in the last week, and estimates a 60 per cent decline in property transactions in the next quarter, with further declines likely in the third quarter of 2020.
This doesn't mean that the UK property market stopped completely overnight: property sales are still being agreed 'subject to contract', although those are down 15 per cent in the last week. Nor have all new property listings disappeared overnight: while some sellers and estate agents have opted to temporarily take down some or most of their listings, some estate agents have managed to record the houses they're listing on video and are marketing them to prospective buyers in this way.
How is all of this going to reflect on house prices? The truth is that it's impossible to predict accurately at this stage, because the main factor that will be affecting house prices in the coming months isn't the temporary decline in supply and demand – it's unemployment levels after the coronavirus crisis is over.
The slowing down of the market right now is unlikely to drastically affect house prices, because both supply and demand are equally affected. However, if we do begin to see higher unemployment levels later this year, that's when we may start to see a downturn in house prices, coupled with even lower mortgage rates. Buyers and sellers will have to see how well the coronavirus financial relief package developed by the chancellor Rishi Sunak will be able to keep the economy afloat in 2020.
At this point, if you were aiming to move house this year, there's no reason not to look – albeit online only for the timebeing. You can also take a look at online mortgage specialist Habito's online mortgage comparison tool to see how much you'll be able to borrow.