House prices set to drop due to coronavirus crisis - will you be affected?
HOUSE PRICES are set to plummet as a result of the coronavirus crisis.
By REBEKAH EVANS
The pandemic has spiralled Britain into economic chaos, with the government racing against the clock to combat the financial impact of the disease. However, it has been estimated house prices will take a severe knock as a result of COVID-19. Experts have predicted the average house price in the UK will fall by 13 percent by the end of 2020.
House prices are set to be adversely affected due to coronavirus (Image: Getty)
Hesitancy surrounding the virus has meant the housing market has taken a severe hit, and will find it difficult to recover.
The Centre for Economics and Business Research (CEBR) recently published a forecast detailing the “economic shock” likely to come about due to the pandemic.
The report reveals a value reduction of an average of £38,000 is to be expected throughout 2020.
And the main reason for the crash of the housing market is likely to do with jobs and wages.
CEBR also forecasted the average British worker is set to lose 35 percent of their income across the next four months.
Prime Minister Boris Johnson placed the UK into lockdown a month ago, meaning many businesses have been forced to close to help prevent the spread of coronavirus.
This means many workers have lost their jobs or have been furloughed in recent weeks.
As a result, people are less able to keep up with rent prices and mortgage payments, or feel comfortable making a significant purchase like a house.
The government also advised buyers and sellers not to move home to keep a rein on movement during the outbreak.
It has been estimated house prices will take a severe knock as a result of COVID-19 (Image: Getty)
CEBR has said the private rental sector is likely to absorb the shock of COVID-19 first, however, this could spiral into a domino effect which impacts the rest of the housing market.
Areas most affected include Yorkshire and East Anglia - with housing prices set to drop by 16.5 percent this year alone.
Following closely behind is the North-West and West Midlands with a 16 percent average drop.
The South East, however, is set to fare better, as is Scotland, with a price fall of 10.5 percent - which is still significant in the current climate.
The CEBR report said: “Although the government has offered up a vast package of support, this lack of demand will mean some businesses cease to operate, many workers will lose their jobs and a lot more will face a cut in incomes.
“Housing is the single biggest expenditure item faced by most households, which means that the shortfall in incomes has a tremendous potential to disrupt the UK’s housing markets.”
CEBR has estimated the private rental sector will be affected first (Image: Getty)
Mortgage brokers have also been reported to have cold feet recently, as they pull many of their products off the market.
Experts have estimated half of all mortgage deals have been withdrawn from the market in response to the crisis.
However, the Financial Conduct Authority (FCA) has advised mortgage holidays as a potential option to combat difficulty for existing customers - a move backed by the government.
This is an extended period where a person can defer payment on their mortgage if they are adversely affected by coronavirus.
Banks have been advised to offer their clients advice on mortgage holidays which could offer them assistance.
However, it is important to note payments will recommence once the pandemic is over, with back payments due as a result.
The property market has also been affected in other ways.
Estate agents have been forced to shutter, meaning property viewings and moving dates have been brought to a grinding halt.