With the UK in lockdown until at least the end of the first week of May, and rumours that social distancing will need to be in place for the rest of the year, it’s difficult to know how the property market will be affected.
Prior to the outbreak of COVID-19, the UK property market was looking strong. Boris Johnson’s resounding victory in the December election is reported to have increased buyer appetite, and confidence in the London market was higher than ever. However, with the handbrake firmly on, how is the market expected to perform in 2020, and what does that mean for investors?
Here are some predictions for the future of the housing market in 2020…
People still want to move
While time frames are impossible to predict, the good news is that many property experts, including the leading estate agent in Mayfair, are optimistic about the fast re-emergence of the market once the virus is under control.
Peter Wetherell, owner of Mayfair property boutique Wetherell, stated that this pause provides everyone involved in the property market, from agents to buyers and sellers, with an invaluable opportunity to reflect on the future. He commented, ‘You have to look forward. I admit that economics is going to be a major factor, but I think there’s pent up demand and a feeling for getting on with life. That will play a positive factor in a quick return to the market.’
With so many people cooped up in their homes, it’s possible many potential buyers will be struck with the realisation that they don’t actually like where they live! With more time on their hands than normal, people will make decisions they may not have made so quickly in regards to upgrading their home, needing more space, or moving locations. And, as Wetherell mentioned, many will be eager to start a new chapter the minute it is a possibility, suggesting we will see a surge of interest in property.
Virtual viewings increase
Although the government have instructed people not to move house right now in order to stick to social distancing rules, interest in property hasn’t dwindled. It’s no surprise that virtual viewings of property have increased during lockdown. People certainly have more time on their hands!
Although people are unable to view properties in person, most estate agents offer potential buyers the chance to peruse properties online. This means that people are able to dedicate time to deciding where to buy, seeing what’s on offer and figuring out what they can afford.
They then have all the time in the world to browse properties, and whittle down a shortlist so that when viewings are allowed once more, they will only need to visit the properties they have identified as real prospects. This means that once lockdown is over, potential buyers could be far further along in the buying journey, and be more ready to make a quick decision.
Additionally, it’s important to note that property professionals are still working. For example, mortgage advisers are still hard at work. This makes this lockdown period invaluable for getting your ducks in a row.Think of this lay period as the prime time to secure your mortgage, identify the right estate agent, conduct preliminary conversations about your needs, and to touch base with your solicitor.
Expect a slow summer
Over the summer, while lockdown restrictions are being gradually eased, expect the market to be a little more sluggish than normal as people establish what they can and can’t do, and as a result of weakened consumer confidence and an unstable jobs market. Hopefully, by autumn transactions should be up and it will be possible to predict how Coronavirus will affect property prices. Initial predictions state that prices across the UK may drop by around 3%, but prices in London are expected to hold steady.
What does this mean for investments?
Under The Coronavirus Act, there is a ban on private tenant evictions for at least three months, and a suspension of 90 days on all eviction proceedings. This has exposed landlords to a long and indeterminate period of incurring rental losses. However, the government have extended mortgage payment holidays for buy-to-let loans. Hopefully this extension will cover landlords until the economy starts to kick back into gear and people are able to pay rent again, and if not – another extension will surely be granted to support landlords.
Although at present, much remains unclear, one thing we can say for sure is that the property market certainly isn’t finished. Instead, it is just on pause, like the rest of us.