The UK property market has not escaped the effects of what is now a pandemic sweeping across the globe. The coronavirus is already having an impact on sentiment after it was slowly starting to show signs of improvement.
Following the Conservatives’ decisive election win, confidence in the property market had been riding high. The so-called Boris Bounce had resulted in agents reporting a marked surge of interest among buyers and sellers. Data from Zoopla showed that buyer interest in some parts of the UK in February jumped more than 60% year-on-year, while Halifax has reported a 2% quarterly uptick in house prices.
However, coronavirus will undoubtedly cut short this recovery. Capital Economics, the research consultancy, lowered its prediction for house price growth in the UK from 3% to 2% in the past few days. That’s no surprise as buyers and sellers will inevitably delay home viewings until the virus recedes.
An increase in quarantine measures has seen estate agents, as well as solicitors and surveyors, work from home or in some cases not at all.
In China, the coronavirus lockdown precipitated a 90% drop in property transactions for three weeks, according to research by Capital Economics, so perhaps a sneak preview of what’s to come for us here in the UK.
The industry will need to step up to combat the difficulties which are unlikely to be alleviated any time soon. Buyers could start shying away from purchases and even signing new rental agreements until the impact of the virus is fully understood.
We know investors are spooked having seen the stock market suffer its biggest one-day fall since 1987 on Thursday 12th March, plummeting 10.9%. We’ll need innovative measures to keep the market from grinding to a halt, such as agents giving buyers video tours on their smart phones - something I know some agents are already doing.
One area which might receive a boost in the short-term is the purchasing of UK properties by overseas buyers. Chancellor Rishi Sunak announced they will pay a 2% stamp duty surcharge from April 2021 in his Budget this month. In the next 12 months, we could well see a flurry of activity to close deals before then.
Meanwhile, the Bank of England cut interest rates to a record low of 0.25% on the same day of the Budget. Lenders were slowly passing on the cut to their standard variable rates (SVRs), but that has quickly changed with a number of lenders increasing some rates, so with the market being so fluid, it’s never been more important to get advice from an experienced mortgage broker if you are coming to the end of a fixed, discounted or tracker rate.
Once the dust starts to settle with the virus, lenders will potentially be seeking to make up for lost time and offer very competitive rates to attract new borrowers and retain existing ones, so watch this space for some seriously cheap mortgage deals – hopefully soon.
