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How will Covid-19 affect the Property Market

Whilst writing this, I want to wish you and those closest to you, the best of health during this time. I also must stress my gratitude to the NHS and key workers for their efforts against the coronavirus.

I have been speaking to a number of clients over the past weeks to discuss the impact Covid-19 will have on property prices.

The current health crisis is sure to affect the property market in the short term, given that people are unable to view during the stay-at-home period, along with delayed transactions due to conveyancing time-frames and removal companies unable to operate.

Whilst we are offering alternative options, such as video tours and video market appraisals, I for one completely understand that nothing compares to that feeling of walking into the property you want to live in for the first time.

Whilst we may not truly know the impact until later in the year, what we have seen at the beginning of 2020 was good signs of increased activity from the pent-up demand created by uncertainty around Brexit over the past three years or so. A recent RICS survey shows that house prices rose at their fastest pace in nearly four years in February. The whole of the UK saw house price gains. Those who had put off moving previously had now decided to go ahead due to the political certainty afforded by the election result in December 2019.

When questioning what will happen to the market during and after Covid-19, one point to remember is the situation we find ourselves in now is a health crisis and not a financial crisis. Although the virus is currently bringing the world economy to a halt, the basics of the banking world are still there, with plenty of money within the financial markets being pumped into the economy trying to get yield.

Furthermore, with the Bank of England recently lowered its base rate, many people could be spurred on to take advantage of cheaper borrowing and realise their desire to move when the time is right and when the government advises on the end of the lockdown/stay-at-home period.

The fact does remain, however, that in every market there is always a cohort of buyers and sellers for whom a house sale and/or purchase isn’t necessarily voluntary. These are sometimes referred to as ‘the three d’s’ – death, divorce or displacement. Whilst this title may sound insensitive or crude, especially in a health pandemic, it covers those who are perhaps selling a property following the death of a family member, as well as those who have to move home due to a new job in a different area, or family movers who need more room to due to a growing or increasing brood. The divorce element is of course pretty self-explanatory.

If you compare the effect of coronavirus to the uncertainty surrounding Brexit can also be useful. While the EU referendum caused some short-term wobbles in the market, in the long-term house prices continued to rise since 2016.

We can also use examples of other health outbreaks, such as swine flu back in April 2009. While the outbreak did impact the economy, house prices still rose by 10.1% between March 2009 and March 2010.

Therefore, if we follow previous economic trends, along with the pent up demand we were already seeing at the beginning of the year, unless the situation worsens drastically, I feel the market will eventually pick up pace again after a period of uncertainty.

Stay safe
Thomas Neil

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