Coronavirus and the property market: will house prices fall and should you still buy a home?

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Coronavirus and the property market: will house prices fall and should you still buy a home?

property-market

Forecasts from the property industry are in as construction sites plan to reopen and virtual viewings and valuations gather pace.

The London property market has mostly come to a halt. Transactions are expected to plummet to their lowest in 20 years in the three months to June.

Yet prices are not forecast to fall as fast or as far as they did after the banking collapse.

So what does this mean for buyers?

How hard has coronavirus hit the London property market?

Activity started to curtail in mid-March as the threat of Covid-19 grew. When full lockdown was announced on March 23 it halted the majority of the housing market.

Physical viewings of all property stopped, whether new-build or second-hand homes, and estate agents and mortgage lenders were no longer able to value properties in person.

As a result Knight Frank predicts a 35 per cent fall in the number of sales in Greater London from 82,000 last year to 53,000 this year, compared to a 37.5 per cent fall across the UK.

Will house prices fall in and around London?

Savills has predicted falls in London of between five and 10 per cent — the most pessimistic of the collection of forecasts made mid-April.

But over the next five years, Savills expects prices will rise by 15 per cent.

However, if the lockdown is extended into summer the industry may be forced to re-forecast.

Will Covid-19 hold up the supply chain of new homes?

Most construction sites closed when lockdown was enforced. However, some developers, such as Taylor Wimpey, Persimmon and Redrow, plan to reopen this month.

There will be a drop in the number of homes built but it will not be as drastic as first feared.

Pressure is on the Government to help buyers by dropping stamp duty and extending the Help to Buy scheme beyond 2023.

Can I still go ahead and buy a property?

Of the homes that were listed on Rightmove before the coronavirus crisis, 97 per cent are still for sale. But there are barriers to buying.

The Government has said anyone wanting to move home should delay the transaction where possible, while physical viewings are out and it varies from lender to lender whether you can get an automated valuation and mortgage approval.

The new-build sector is open for business, with new apartments being marketed online via virtual tours.

For those who feel comfortable with buying off-plan and online, who do not have a property to sell and have a reasonably sized deposit given current mortgage constraints, it is possible to buy and move into a new-build home during lockdown. Some removal firms are operating.

Source: Homes & Property

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