House prices: Could house prices crash over coronavirus?
HOUSE PRICES had enjoyed a boost thanks to the general election in December, but now the markets face uncertainty as the coronavirus pandemic continues. Could house prices crash over coronavirus?
By GEORGINA LAUD
In the month after the election, the property market was feeling the effects of a so-called “Boris Bounce” after Boris Johnson’s huge majority victory. However, could the current coronavirus pandemic put an end to this? Coronavirus is spreading rapidly around the world, and has now pushed the UK into phase two of the Government’s coronavirus ‘battle plan’. But as more and more cases of coronavirus are declared each day, how will this impact the housing market?
Director of Property Lender MT Finance, Tomer Aboody, told Forbes that despite the strong start to 2020, coronavirus is a threat.
He added there is “the possible pandemic of the coronavirus hitting the financial markets, this could have an impact on all-important property confidence.”
However, as yet, coronavirus has not seemed to impact the housing market.
Research from London-based estate agency Benham & Reeves found generally buyers and sellers are returning to the market in confidence.
House prices: Coronavirus is having a major impact on the market (Image: GETTY)
In total 83 percent of those surveyed responding that they intend to continue with planned home sales or purchases this year despite the virus.
Last week, The Bank of England announced an emergency cut in interest rates in a bid to shore up the economy amid the coronavirus outbreak.
Rates were reduced today from 0.75 percent to 0.25 percent, taking borrowing costs down to the lowest level in history.
Mark Carney, the Bank’s governor, said: "The Bank of England's role is to help UK businesses and households manage through an economic shock that could prove large and sharp, but should be temporary.”
House prices: The market expected to see a 'Boris bounce' (Image: GETTY)
House prices: Despite the strong start to 2020, coronavirus is a threat (Image: GETTY)
The impact this could have on the housing market is as yet unknown, as the length and continued coronavirus outbreak could cause yet more disruption.
The Halifax managing director, Russell Galley, said: “The UK housing market has remained steady heading into early spring.
“The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand.”
However, looking into the future Mr Galley said it was a waiting game to ultimately see how the housing market was impacted by coronavirus.
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He said: “Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.”
At the beginning of this week, property shares had dropped up to 12 percent as investors felt fears over the widespread impact of coronavirus.
Martijn van der Heijden, Chief Strategy Officer - from online mortgage company Habito, said last week: “The measures announced this morning by the Bank of England sees interest rates back at the lowest level they have been, something not seen since the cut after the Brexit vote in 2016.
"This, the Bank says, is a move to mitigate the “sharp, large and temporary” impact of the coronavirus crisis.
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The Bank hopes these precautionary measures will bridge coronavirus related economic disruption and only goes to highlight that it could become a more challenging environment for homeowners and homebuyers in the coming months.”
For people who may be worried to buy a home right now due to the market, Mr van der Heijden said: “People should go for a home because it’s their dream home, and they can afford to live in it now and in the future.
“I don’t think the availability of mortgages will change that much.
"In that sense, it is just a good a time today as it was a week ago and probably is in a months time.”