The Coronavirus pandemic has caused large parts of the UK economy to experience severe turbulence over recent months, leaving questions over the future of house prices.
With millions of people expected to be left unemployed as a result of the pandemic, it may be easy to think that house prices will fall. Perhaps, house prices could crash and fall dramatically, like the price of US oil.
Or maybe not.
As the UK experiences its sixth week of Coronavirus lockdown measures, estate agents have still been at work and selling houses – just not in the usual face-to-face manner. We spoke to Jamie Minors, Managing Director at Minors and Brady Estate Agents in Norfolk, who told us that after an initially difficult spell, interests in the property market are now getting stronger;
“Whilst the pandemic has ‘frozen the market’, there are incredible amounts of pent up demand and we have sold many homes through video tours. First-time buyers want to move out, families want to upsize, investors are grabbing empty property deals and divorces are inevitable after lockdown. The last week has been incredible for new enquiries, with video tours and virtual viewings, demonstrating the classic phrase ‘people need somewhere to live’.”
House prices in the UK have been rising in most parts of the UK over the last decade, and particularly rapidly in England from 2013-2016. According to data from the Office for National Statistics (ONS), the average house price in England in February this year was £246,341. The average price in Scotland sat at £150,524, while in Wales it was £164,435 and in Northern Ireland it was £140,190.
The latest data from the ONS shows that house prices in England and Wales fell slightly between December 2019 and February 2020.
The impact of the COVID-19 pandemic on the economy has led to many comparisons with the Great Recession of 2007-2008. In terms of the property sector, house prices in all areas of the UK fell between 2007 and 2008, while in Northern Ireland, prices fell particularly sharply and prices today are still considerably lower than 2007 levels. Mr Minors has though cautioned against comparisons with the recession;
“There is still incredible demand to buy, whereas before nobody had money. The government furlough scheme has saved the market. Did we have furlough payments in the last recession and various loans and grants? We didn’t. This can’t be compared fairly or accurately to data from previous recessions.”
Mr Minors added;
“Some properties will sell for below market value, purely based on their rushed timescales for their sale, however, this will only be in a small number of circumstances like where there are empty properties or forced sales. I often find agents are the first to see positive or negative movements in the housing market, based on enquiry numbers, but Nationwide have also reported a positive projection post lockdown.”
Estate Agents are finding reasons to be optimistic, with many experiencing rising registrations. Rightmove has said it recorded a 20% rise in visits to its website recently, while Savills and other agents have also recorded increases in interest and registrations. Some people are beginning to take a critical view of some projections for the crashing of house prices, such as were predicted after the UK voted to leave the European Union in 2016. While the growth in house prices has slowed since the EU Referendum, prices have still continued to grow throughout the UK. The average house price in England has risen from £228,430 in June 2016 to over £249,000 last summer.
While the UK remains in lockdown, it is still too early to say how the pandemic may impact house prices in the long term, but it doesn’t look like we should anticipate a sharp fall in house prices anytime soon.