What Effect Will Coronavirus (Covid-19) Have On The Property Market?
Covid-19 or more commonly referred to as Coronavirus will be something the world remembers for years to come.
The pandemic that swept the world with whole countries, including the UK, going into lockdown to combat the virus, I myself write this from the comfort of my own home.
The impact the virus has had on the economy so far has been phenomenal. Since the outbreak began stock markets across the globe have been in freefall, business have had to shut, the travel industry has ceased.
The Bank of England have cut interest rates from 0.75% to 0.25%, then a few days later to 0.1%, the lowest in history, to try and help businesses and individuals cope with the economic damaged caused by Covid-19.
The underlying question is, what affect will the virus have on the property market?
The true answer is that no one knows, because it depends how the economy bounces back from this, however we’ve been in the property industry a long time and although we’ve never quite seen anything like this, based on our experience we can provide you with our best guess on what is going to happen.
Businesses across the UK have shut, which also includes the likes of estate agents and with the rules surrounding lockdown it makes viewings virtually impossible.
Some solicitors are still operating, but this is likely at a reduced capacity.
The uncertainty may also cause buyers to pull out of ongoing property purchases or at least delay completion dates.
All this means that the property market is all but going to slow to a halt.
There may be some scenarios where this isn’t the case & savvy investors look to snap up any deals there are to be had for people still eager to sell, but this is a small percentage of the overall market.
After this is all said and done, normality returns, there’s going to be a period in which buyers are extremely cautious whilst the economy is in an unknown period with threats of recession.
Sellers will likely have to reduce their asking price in line with demand coming on more of a necessity to move, or alternatively just put off selling all together and ride out the wave of uncertainty.
Our CEO, Jonny Christie, has commented on the situation stating “I believe we will see a drop in houses price by between 10-15% by the end of 2020 to fall in line with demand, but I expect this to be short term and fully recover by mid-2021, or even sooner.”
Long Term Impact
This is obviously much harder to predict.
The sceptics and scaremongers amongst us will be saying that we’ll see a recession off the back of this pandemic, if that was the case the closest comparison we can offer for this is what happened in the 2007 financial crisis, in which the average UK house lost 20% of its value.
The optimists would say that this is a global issue, and would crash economy and property markets across the world if the powers that be don’t get together and come up with an agreement of sorts to supplement this and prevent a global recession.
The truth is we’ll have to wait and see, there’s never been a global pandemic of this scale.