Can the housing market recover from Covid-19?
26/06/2020 - Attwells Solicitors LLP
With Covid-19 having had a significant impact on the property market, property law specialists, Attwells Solicitors, look at some of the effects of the pandemic, and the subsequent lockdown has had on the UK property market and why they feel optimistic about the future as we begin to recover from the economic effects of the crisis.
At the start of the year house prices were gathering momentum, mainly thanks to low borrowing costs and the return of the 100% mortgage. Plenty of new houses were being built to meet the demand from first time buyers, and the market was in a strong position.
Then came Covid-19. When the government had no choice but to ban property viewings and sales in March as part of their effort to prevent the spread of Covid-19, it pushed the property market into unchartered waters.
With figures estimating that one in eight people are now reconsidering their plans to move post-lockdown, and a report by Halifax suggesting house prices have fallen for three consecutive months up to May, it’s clear that stimulating the housing market back to full health won’t be easy, but it might not be as bad as people think.
Evidence of rising demand from buyers
Most analysts of the market are predicting short-term drops rather than an all-out housing market crash.
Rightmove reported their busiest day ever on 27th May, with six million site visitors. And that data is providing information on how buying priorities have changed, with many buyers now looking for properties that offer space for a home office and a large garden.
Government assistance guiding resilience
The governments introduction of the furlough scheme and various other cash injections by the Treasury has resulted in the protection of many jobs and income streams, at least so far.
The prospect of financial security, alongside stamp duty exemption for first time buyers, and a lower bar for access to mortgages with long term fixed rates, is giving people confidence that they can still plan to move, and be able to afford it. The Bank of England’s lowest ever recorded base rate, at 0.1%, will also help to stimulate the market.
Attwells adds “We will have to wait until the end of the year before we understand the true impact Covid-19 has had on the housing market. Early indications do suggest that while there has been a moderate decline in house prices, the impact might not be as severe as we thought.
“The UK has a resilient banking system, and there remains a lot of support from the government to help households navigate the storm. With interest rates set to remain low, it is hoped together, these factors will support the demand for housing across the UK”.
Although uncertainty is still in the air, and the path the pandemic will take remains to be seen, many housebuilders are now reporting strong interest since they reopened their sales centres.
It’s possible that ‘the long pause’ has made people look at where they live, and decide that they can move after all. Time will tell, but the evidence is there for cautious optimism.
The team at Attwells solicitors have continued to help their clients throughout the Covid-19 crisis and to help stimulate the property market, Move Ready, Attwells new conveyancing service, is free of charge for those instructing them – and ensures the majority of the legal work required is completed before the property is placed on the market.
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