We’ve avoided jumping on the bandwagon, but as the situation has worsened, we now must look at the potential impact this has on property prices and the broader market. We’ll also make some rudimentary predictions for the coming months.
As you’re no doubt aware, the UK Property Market was going through an insurgence, with Brexit decisions being made and the certainty of the political landscape for the coming years, there was what was known as the “Boris Bounce” which saw house prices surge in the early part of 2020. The current market remains strong as property is resilient – it is slightly affected by external market factors, but on the whole, it doesn’t change too much.
The Coronavirus does, however, seem to be putting the brakes on the surge in UK house prices as we see the global stock markets decline through both inactivities in finance and reluctance to make significant financial decisions. The FTSE is down to 4959 (Monday 16th March) from 5299 at close on Thursday. When the markets opened on Thursday, it was at 5876. Markets are declining, and people are struggling to make decisions as to their financial futures.
How does this affect the UK Housing Market?
The Bank of England lowering its base rate of interest is welcome news for those looking to borrow in the coming months. It provides a favourable price to those who are making mortgage purchases. This should motivate people to invest in property due to the cost of borrowing being so low. As the chancellor announced a reduction in stamp duty in the 2020 Budget of 2% surcharge in April 2021, we could also see an influx of interest from overseas who are looking to take advantage of how strong the UK property market is before the rates come into play in April 2021.
Long term we know that the UK property market is unlikely to be severely affected long term as we have seen increases in house prices across the UK throughout 2020 already. These gains are unlikely to be lost – the likelihood is that they’re “paused” as the UK comes to terms with the Coronavirus and decisions are made across the world as to what the future holds in that regard.
Personal Circumstances may change short term
Due to the self-isolation and increased global rulings on travel, there could be a short-term impact on finances at a personal level. People are now being encouraged to work from home where possible. This could be positive, giving people more time to make decisions on their financial futures and investment opportunities could be more attractive due to the long-term prospects they secure. It could, of course, also be assisted by technological advancements – people are now more connected than ever before.
The reduction in the need for any face-to-face contact throughout the lettings industry could also help, landlords now can conduct business with tenants remotely, with Skype and other options available.
"COVID-19 or Coronavirus has now reached the point where it needs to be discussed seriously. Still, overall, the UK Housing Market should remain somewhat unaffected even if there is a slight slowdown in the recent growth we've seen so far in 2020."
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