How Exactly Will Coronavirus Affect House Prices?

While buyers and sellers are cautiously re-engaging with the housing market in England, experts are anticipating housing prices to continue their trend downwards because of the resulting economic uncertainty that continues to permeate due to the devastating effects of the global pandemic caused by COVID-19. Below, we will be going over what might happen to home prices as the market continues to reappear from the unprecedented global lock-down and we will be going over some specific advice that you should utilise when planning on making an offer for housing property during these unprecedented and uncertain times.

What is happening in the housing market? The government actually made moves to ease the restrictions of the stay-at-home measures in England on the 14th of May. This meant that the property market was able to effectively reopen. Thus, estate agents were now able to conduct proper house viewings once again. Whereas, buyers were able to make in-home visits and do their respective shopping. Rightmove noted that its website traffic returned to normal starting on the day the stay-at-home orders were lifted accumulating nearly 5.2 million visitors. That being said, it is widely expected for it to take quite some time for housing sales to get back to pre-COVID numbers. After all, only 11,000 properties were found listed for sale on Rightmove the week following the restrictions being lifted. Compared to last year, the number is down a significant 65%. A brand new survey conducted by Zoopla found that 41% of home movers are actually stalling their plans altogether. 1.175 million house moves were recorded in the UK just last year. Whereas, Knight Frank agency predicts only 734,000 total moves this year. Whereas, Savills estimates the number of total moves to range from 566,000 to 745,000.

How exactly have the prices of homes changed? It's certainly too early to tell the final impact COVID-19 will have on home prices, and the homes on the market are expected to fluctuate considerably within the coming weeks and months. Perhaps the most accurate measuring stick of home prices is the Land Registry's UK House Price Index. The most recent data is from March and it had overall home prices falling by 0.2% month-on-month, but it had home prices growing 2.1% year-on-year reaching a total of £231,855. While this specific timetable isn't overly useful in context as it doesn't fully account for the impact of the coronavirus. After all, all of these transactions had to have been agreed in principle prior to the stay-at-home directive set forth by the Government. Unfortunately, that is really the most up-to-date data we have to go on. Rightmove ended up unveiling its asking price index without a specific figure for both April and May as it noted that far too few properties were being listed to offer an accurate number. Whereas Nationwide's index was able to report a 1.8% year-on-year increase in home prices in the month of May, but they also noted that home prices had fallen a total of 1.7% on a month-on-month basis. Likewise, they noted the number of home sales and mortgage approvals experiencing a very steep decline.

Knight Frank forecasts that UK house prices will fall by as much as 3% for the year. However, they note that it will bounce back in a big way by increasing by 5% in the following year (2021). This stays true with the prediction that the economy in its entirety is likely to shrink significantly this year. Savills has a couple of predictions that ultimately depend on the outcome of the impact of COVID-19. One of the first predictions forecasts a steady 5% drop in home prices on the year and a 5% increase the next year. Whereas, its second prediction forecasts a major 10% fall this year and only a 4% rise next year. Lloyds Banking Group, in its an interim financial statement, noted that it has been working on the direct assumption that the home prices will fall as much as 5% on the year prior to recovering at the rate of a 2% rise next year. Zoopla anticipates that both buyers and sellers will begin to act with even more caution throughout the next few weeks despite having an initial surge upon the market reopening. They note that there will be a decrease in mortgage options which mean that first-time homebuyers will need to put forth more equity in their home purchases or completely step away from the idea of buying a home.