What effect could the coronavirus have on the housing market?
The coronavirus, known as Covid-19, has well and truly established itself as a cause for concern in all sorts of financial markets. Stocks have tumbled in recent days, while the foreign exchange markets have seen turmoil. But what has the effect been on the housing market – and what does it mean for people who are looking to sell their property in the near future? This article will delve into the data so far, and it will also explore what could happen in the coming months.
What’s happened so far
The coronavirus is of course still in its early stages – and it’s far from guaranteed that the country, or the world, is beyond the worst. It has only really been in the headlines for a couple of months, meaning that its impact on the housing market might not be clear for a little while yet. However, there is a key set of data on this already available – and that’s the February sales data.
According to Halifax, which is a leader in this field, there was a quarterly rise in prices equivalent to 2.9% over the course of the three months running up to February. This represents the speediest rise in over four years. This period includes the general election victory of Boris Johnson’s Conservative Party, which reassured the markets a little and provided some stability in the context of Brexit. However, it also goes to show that worries about the impact of the coronavirus was not having too much effect on the housing market – or, at least, not yet.
According to an article in the Evening Standard’s Homes and Property magazine, estate agents in London are now enjoying a big boom in buyers announcing that they’re now in the market for a new home. It is suspected that many have suppressed this urge during the periods of turmoil which surrounded Brexit towards the end of last year. In terms of raw figures so far, it’s pretty clear that coronavirus isn’t holding many people back just yet.
What’s to come
The picture begins to get a little more gloomy once future predictions are factored into the equation. In fact, according to Russell Galley – who is a managing director at Halifax – coronavirus is one of a number of risks which are currently facing the British housing market. Galley didn’t go into much detail about the nature of the risk in the part of his statement quoted in the magazine, but it’s clear that the fears of risk are coming from somewhere.
Perhaps one risk might lie in the fact that the coronavirus crisis appears to have had a noticeable effect recently on mobility. With several advanced economies around the world now instituting lockdowns in order to combat the spread of the virus, it’s possible that in the coming months an aversion to moving from place to place might develop. This could especially impact those who are planning to sell up and relocate from one town or city to another, especially if there is a fear that a lockdown could take place while the sale was going through – leaving buyers trapped in limbo and unable to enter the place in which their new property is located. Whether or not this reality would come to pass is unclear – but when significant decisions like property purchases are on the line, many buyers may choose to err on the side of caution even if such an outcome isn’t guaranteed.
A complex economy
The modern economy is complicated and interconnected, and as a result, it could be that the coronavirus itself doesn’t end up having direct effects on the housing market – but that it instead causes havoc indirectly. Take the example of jobs. Unless you’re a cash buyer, it’s pretty likely that you’ll need a mortgage in order to get your property purchase over the line – and for that, you need a stable income which doesn’t appear to the lender to be under threat any time soon. If coronavirus begins to cause certain industries to suffer and shed jobs, this could have a knock-on effect on the housing market. Mass-scale closures of venues could cause those who work in the entertainment industry to feel uncertain about their employment, for example, which could, in turn, put them at risk of being unable to secure a mortgage.
Hard to predict
It’s also worth noting that it’s very hard to predict what the housing market might do next. As in any situation involving property prices, a “wait and see” approach is to a large extent the only useful one to take. In the event that you need to move to a new house for some pressing reason, such as a job relocation or similar, it’s a wise idea to – at least for now – explore pressing on as normal until it becomes clearer just what effect coronavirus might have.
While there are few certainties in the housing market, it also pays to avoid being overly nervous when it comes to putting in offers and looking for new places. Keeping an eye on press coverage about the virus’ effect on housing is a good idea, and it’s also wise to find a good estate agent who is plugged into the local market and who can help you get the information you need to take appropriate context-dependent decisions.
Coronavirus isn’t just a health epidemic. It’s an economic problem too, and countries and markets across the globe are beginning to feel the consequences. While there has not been any obvious sign of profound coronavirus-related effects on the housing market as yet, there’s still time – and it’s not out of the question that a slowdown in the property market could be on the cards soon enough.
If you’re struggling to sell your home either due to coronavirus or some other risk in the markets, don’t suffer in silence. Get in touch with National Property Trade here, as we may be able to help get your property purchase moving along.