The Property Industry’s New Normal
The COVID-19 pandemic and subsequent lockdown are inevitably going to have a big impact on all parts of the UK economy. And while the housing market is one of the most resilient parts of the economy, it’s likely that the repercussions of the pandemic will be felt in the industry for months and maybe even years to come.
At the moment, there’s still a lot of uncertainty surrounding the pandemic, the lockdown and the housing market. However, some trends are beginning to emerge, giving us a glimpse into what the post-COVID market might look like.
With estate agents, law firms and surveyors closed across the country, property transactions have all but ground to a halt. According to recent figures, the sales of up to 400,000 homes had stalled by the end of April, with over half a million transactions expected to be on hold by the end of lockdown. It’s expected that even if the market picks up when the pandemic is over, this will result in a drop of sales of around 38% for 2020.
Although house hunters are currently unable to view properties in person, interest is actually on the up. The main online property portals have seen traffic rise by up to 20% since lockdown began. This shows that as people sit at home waiting for the chance to return to work, they’re browsing the internet in search of a potential new home.
This increased interest from house hunters could be great news for the market when things finally get back to normal. If millions of people are chomping at the bit, ready to make an offer, the housing market could well bounce back quickly and powerfully.
Reduced interest rates
Right at the beginning of the pandemic, the Bank of England slashed interest rates to a record new low. The base rate now stands at 0.1%, significantly less than the 0.5% it dropped to at the height of the 2008 financial crisis. By lowering rates, the Bank of England hopes to stimulate the economy and help the UK get through this difficult time as easily as possible.
One consequence of the new record low rate is that mortgages are likely to become more affordable. While new products haven’t yet hit the market, it’s likely that, when the housing market does get going again, buyers will have access to some very tempting mortgages. This could further help to boost the market and encourage house hunters to start buying.
Prior to the start of the pandemic, house prices across the UK were on the up. There were strong signs that prices were going to continue to rise in all parts of the country, with several regions showing their strongest growth in years. Although the pandemic is likely to impact these rises, bricks and mortar remain an excellent place to put your money. In fact, property investments have been outperforming general equities since the start of the virus outbreak.
Find out more about how COVID-19 is impacting the Norwich and Norfolk property markets, and learn about our response to the virus, by contacting us today.