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Let’s first begin by addressing what can only be called the elephant in the room. The recent COVID-19 outbreak has caused economic calamity throughout the world. Major stock markets such as the Dow Jones and the FTSE have taken massive losses and the unfortunate fact of the matter is that we are likely to enter into yet another global recession. In order to appreciate how housing prices across the United Kingdom may be affected, it is first important to take a look at some basic economics.
Supply and Demand
Properties are an asset. The value of any asset is based upon the relationship between supply and demand. When supply is low and demand remains high, values will rise. The other side of the coin is just as relevant. The main question therefore involves just how much prices may fall. According to recent figures put forth by The Telegraph, values may plummet from anywhere between 5 and 30 per cent. This is due in no small part to the fact that well over 370,000 sales were suspended once the nationwide lockdown was initiated on 23 March. In other words, both supply and demand seemed to dry up.
Not All Bad News
The information highlighted above would seem to paint a rather bleak picture of the property markets in general at first glance. However, it is important to mention that the sales moratorium that was enacted in March has recently been lifted. What might this signify for the near future?
To answer this question, it is crucial to note that home prices in London and major metropolitan areas were experiencing a decidedly bullish market until the coronavirus outbreak. This growth was not ablated, but rather put on hold from a short-term point of view. This is why some analysts are now beginning to take what can only be called a cautiously optimistic stance in regards to the near future. Now that viewing restrictions have been lifted, a growing number of potential buyers are once again keen to become involved. As some industry experts note, this could help to stem further losses within the entire sector (under the assumption that purchases resume within a timely fashion).
A Slow and Cautious Upward Trend
It is still important to note that publications such as the Financial Times have noted that this thaw in the property market is not likely to ablate past doldrums in a mater of weeks. Let’s remember that many social distancing measures will remain in place for some time. Agents will be employing disinfectant when greeting customers. Mass viewings and open houses are not permitted. In other words, the term “business as usual” will not immediately apply to the property sector.
Additionally, many individuals are currently dealing with financial uncertainties as a result of furloughs and similar employment woes. It therefore stands to reason that the entire marketplace will not witness an influx of liquidity until the entire nation begins to enjoy a greater degree of economic stability.
All About the Big Picture
The good news is that the majority of experts feel that the COVID-19 outbreak will not impact the housing markets nearly as much as the 2008 financial crisis. It is still important to mention that the outcome of this current pandemic is still far from certain. This is why it is best to err on the side of caution for the time being and above all, to appreciate that we are living through a short-term downturn as opposed to an exponential rout.[Sassy_Social_Share]