Impact of Coronavirus on the Housing Market

We are nearly at the end of April and whilst the country remains in lockdown we look at some of the opinion of the impact of Coronavirus on the housing market.  In March the government asked the sellers and buyers of homes to suspend their transactions unless absolutely necessary.  Naturally, this is a massive impact of the Coronavirus on the housing market with Zoopla reporting that demand for homes fell by 70% over March but the decline bottomed out by early April.

Perhaps surprisingly Zoopla also report that whilst fewer homes came onto the market, the total number of homes for sale was just 4% lower than at the start of March.  Zoopla say that house price growth to March 2020 was up 1.8% but the price change registered over the month of March was the lowest for a year at 0.1%.  Encouragingly, Zoopla report that the drop in demand bottomed out in early April and has started to improve slowly from a low base.

The Nationwide House Price Index also shows that house prices pushed higher before the pandemic hit the UK with prices up 0.8% in March, after taking account of seasonal factors.  The sample excludes recent Covid-19 disruption. The Nationwide House Price Index shows an annual change of 3.0% with an average price of £219,583.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “Annual house price growth increased to 3% in March, up from 2.3% the previous month – the fastest pace since January 2018 (when annual growth was 3.2%). The last six months have all seen month-on-month increases, after taking account of seasonal effects.  It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month.  This means that developments following the UK government’s lockdown will not be reflected in these figures.”

“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.  Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus. “

“Annual house price growth increased to 3% in March, up from 2.3% the previous month – the fastest pace since January 2018″

Impact of Coronavirus on the Housing Market

We will inevitably have to wait until later to see the impact of Coronavirus on the housing market and the economy. However, the government support to businesses and employees will contribute to softening the impact.  So far, we not seem to have seen any immediate panic withdrawals by buyers, and indeed despite social distancing, some estate agents are managing to agree sales using innovative virtual tours.

With a limit to new property stock becoming available, we would expect there will be continued upward pressure on prices.  Whilst there will be no immediate expectation of a loosening of the lockdown rules, we could well be seeing estate agents getting back at work in the next few weeks.  It will be interesting to the rush to complete both existing sales and what demand is released.

In the meantime, keep safe and contact us if you need any funding support.

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