With the whole world undergoing a crisis because of the pandemic caused by COVID-19, how is the real estate industry going to be affected? Is the UK ready for a price crash of estates on sale?
The Property Market
Property markets are beginning to open particularly in England, Scotland, Northern island and Wales somehow relaxed its restriction. This means that in-house viewings have started once again and that buyers all over UK are able to buy a house and move from one place to the other.
There is a rough estimate of about 700,000 moves within the UK for the year 2020 but there was a 3% decrease as compared to a year ago. About 1/8 of the buyers opted to put off moving because of the recent lockdown. The present pandemic situation makes the people uncomfortable with moving and are waiting for further developments before continuing their plans.
Are the House Prices going to Change?
It might be too early just yet to predict an upcoming house price crash but with the recent figures reported, the prices are currently going down. House prices growth reportedly fell from 3.7% to about 1.7% last May.
Prior to the lockdown, the real estate market has been growing quite steadily with economic provisions that aims to support the industry. After the lockdown, the safety measures and limits set by the government has a great impact on the flow of housing transactions. It is expected that this trend will go on for some time until the people became comfortable and the economy recovers from the side effect of the pandemic.
There are different predictions as to whether the property market will be able to bounce back relatively fast after this setback. Majority of these predictions says that there would be a cold price drop by at more or less than 5% this year before seeing the light again on 2021 and increase by about 1.5% to 3%.
The Struggling Borrowers
The lockdown caused millions of jobs to be paused hence the flow of income within a household is cut. The Financial Conduct Authority (FCA) announced last month that the borrower’s mortgage payment holiday will be extended further for 3 months or their payments can be made staggered. This is to help those who are financially unstable due to the coronavirus.
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