Post-Coronavirus property market predictions

MD, Alex Davies reviews post-Coronavirus (Covid-19) property market predictions

The property market is highly influenced by local factors but in these uncertain times, an understanding of the national trends and opinions is valuable.

Savills research team recently offered some interesting analysis of what a UK property market recovery could look like post-Coronavirus predicting transaction volumes could be down by up to 45% for 2020 with the greatest impact resulting from the next 3 months.

Savills cited impediments to property market activities such as the interruption to agency, conveyancing work and a drop in consumer confidence whilst recognising the Government’s response with extensive support for the economy and business as well as liquidity injections, grants and low-cost loans.

I think that few would disagree that the Government is working hard as Savills suggest, but encouraging lenders to take a benevolent approach to those struggling with mortgage payments may prove to be little more than a band-aid.

Changes in mortgage lending

As each unprecedented day passes, it is becoming clear that the Banks and mortgage lenders have no intention of propping up the housing market with mortgage offers being revoked and money being conserved.

So with agreed transactions on hold, estate agents confined to online marketing, Furloughed workers, restricted or non-existent mortgage lending and closed businesses, it is a matter of time before the true analysis of the housing market can begin.

What might we learn from China?

Savills analysis states that sales have recovered in China by 50% of the four year average in the 2 months since movement restrictions were lifted. Knight Frank says that 39,455 sales transacted across 30 major cities in the first 27 days of March compared with the 4,578 over the same period in February.

Due to the pent up demand following Brexit, the first two months trading of 2020 produced healthy numbers of agreed transactions in many parts of the UK with many of these transactions now placed on hold only to be released when lockdown restrictions are lifted. Whilst many of these transactions may fall by the wayside, many could hold together and release to exchange of contracts in the following weeks.

Could the figures reported by Savills and Knight Frank’s China analysis really be showing the same release of pre-existing transactions rather than a resurgence of new market activity?

Emerging from lockdown

When we emerge from lockdown restrictions the market will respond as quickly as mortgage lenders review their lending criteria. New activity is likely to be unleashed from pent up demand providing that mortgage products are available.

The housing market is driven by the economies of supply and demand but also from the availability of funding and cash liquidity. The Savills analysis states that the central London market is likely to lead the recovery due to many sales taking place in cash but this sector could easily emerge as one of the casualties of global Stock Market volatility. Could it fall to the provincial markets to lead the way with those homebuyers who have regained employment security?

The simple economics of supply and demand consolidates the status quo for house market prices and governs the framework for recovery. The dynamics can be hard to predict with human behaviour an unknown factor. What will be the perceived state of play, how will the damaged economic backdrop be viewed by those who simply want to move home after being restricted from doing so and how long could it take to re-establish real job security.

Increased supply may result from those who are forced to sell from a change in financial or personal circumstances arising from Covid-19. This may be countered by a withdrawal from the market from those who are no longer able to move for similar reasons or perceive that a better time to sell will emerge.

The housing shortage, so well documented in recent years, exerts constant upward pressure on house prices in many parts of the UK – nowhere more so than in the South East. There are still not enough homes being built and Covid-19 will have slowed the process despite many construction sites remaining open for a while.

When the virus is defeated and the housing market returns to some sense of normality we may well see the unleashing of pent up demand from movers of necessity, sellers needing to release equity becoming downsizers or reduce their borrowing, opportunists seeking investment safe havens in property and job relocations arising from the contraction of workforces.

The recovery following the 2008 financial crisis saw each and every one of these stimulants.

The factors that drive a housing market recovery can wrong-foot even the most enlightened economists and that is because human behaviour is difficult to predict but historically, in the UK home, moving is at the heart of domestic financial recovery.

The speed of a property market recovery will depend on whether the population can, and not whether they want to move.

Our patch

And I predict that the South East will continue to be something of a special case.

Demand is always likely to be strong for good homes in our local towns, villages and countryside given the growth in this region and our excellent communication links.

Making the most of your property

Would you like us to send you a quick email when we publish our next article?

These will include tips and advice on how maximum your enjoyment and return on investement from you property.

Other Recent Articles

View all

Post Stamp Duty Holiday: What next for the property market?

When Rishi Sunak announced a temporary Stamp Duty holiday on July 8th 2020 to counter the effects of the Pandemic, homebuyers celebrated the chance to save on buying costs. Was he right to do it? […]

Find out more

Wye - Kent's Super Village

So what is it about the village of Wye that creates it’s extraordinary reputation? Unlike many villages in my part of Kent that are equally as pretty and have local facilities, it has a selection […]

Find out more

Millie Green - A Review of Ashford

The Kentish town of Ashford is known for many things: the International Station, the Designer Outlet and a plethora of secondary schools. These are all great assets to the town, but at Hobbs Parker we […]

Find out more

Stamp Duty Savings - are you buying a house with an Annexe?

“We sell many homes with accommodation that is separate to the principal home but very few buyers are aware of the Stamp Duty savings they may be entitled to.” Alex Davies

Find out more

Very small ski chalet for sale!

It's tempting to take snowing photos of your home when selling it. But is this a good idea?

Find out more

How many Ashfords are there in the UK?

Our website contains a database of all the villages, towns and cities in the UK. We combined this data with Google Maps to created this interactive map of all the Ashfords in the UK.  

Find out more

The 50 Most Popular Villages

Our website is very busy — every day up to 6,000 people visit our website. Many are researching the ideal location for their next home and spend some time reading about the towns and villages […]

Find out more

Tips to help you establish a great Wild Garden

If you’ve been watching TV nature and gardening programmes lately, you’ll have seen a lot of interest in wild gardens. There are many advantages to wild gardens: they cover the ground in a beautiful mix […]

Find out more

Five Predictions for the Local Property Market in 2021

2020 was a tumultuous year for Hobbs Parker with our estate agency business up by 25% breaking all previous records. Despite the gloomy start to 2021, with further lockdown measures introduced, I anticipate sustained activity […]

Find out more

Tips for buyers and sellers when dealing with properties from a bygone era

The first clue upon arrival is the general look of neglect. Tired net curtains hanging at the windows, peeling paintwork, stains from a leaking gutter, a rusty gate opening on to an entrance path overgrown […]

Find out more

The 'Race for Space' and house price inflation in 2020

Are rising house prices about more than just the normal supply and demand? With so much talk of the Covid crisis, it’s almost possible to forget about the numerous economic hurdles that affect house prices. […]

Find out more

Why Rishi cannot claim all the credit!

What a strange world we live in when sales of houses are going through the roof against a background of a global pandemic. Whilst the Stamp Duty holiday is welcome, this was happening before the […]

Find out more

Stamp Duty cut has immediate impact!

The temporary cut is with immediate effect and therefore reduces the cost of a property purchase straight away saving an average of £4,500 for residential property buyers providing they take advantage of it before the holiday comes […]

Find out more

Will Netflix and Amazon affect property prices in Ashford?

There has been talk of an Ashford metamorphosis for almost as long as I can remember. The opening of the ‘Missing Link’ of the M20 motorway between Ashford and Maidstone in 1991 would surely bring […]

Find out more

Might Estate Agents open first to help rebuild the economy?

A recommendation is reported to have been made in a report written for the Government by Conservative peer Lord Gadhia and Sir Jonathan Symonds, chairman of GlaxoSmithKline. Along with coffee shops and restaurants, Estate Agents […]

Find out more

Do virtual tours and viewings work?

While lockdown and movement restrictions mean that buyers are prevented from physically viewing homes for sale, evidence suggests that many buyers are spending more time on property websites and portals to pass the time and […]

Find out more

Post-Coronavirus property market predictions

Savills research team recently offered some interesting analysis of what a UK property market recovery could look like post-Coronavirus predicting transaction volumes could be down by up to 45% for 2020 with the greatest impact […]

Find out more

Bucking the national property 'downturn'

It is true that we agreed 35 sales during October which we think are good results by anyone’s standards but I can tell you it doesn’t come easily and not without a lot of hard […]

Find out more

Why 2019 is the right time to invest in Ashford

“If you have ever wished you’d invested somewhere that has regenerated, you will know that you are already too late.” These are the words of Alex Davies, Managing Director for Hobbs Parker Estate Agents, an […]

Find out more

How do you get the best price for your house?

How do you get the best price for your house? Answer: When you put your house on the market for the first time make sure it is at the correct market value — do not be tempted to ask for […]

Find out more

Historic Property Auction Particulars -- Mersham 1878

These have been hanging on the wall in our boardroom for as long as I can remember. I recently happened to ‘bump into’ two of the current owners of the cottages when I gave a […]

Find out more

Listed Buildings Advice

The market for period property is booming and the older the house or cottage, the more likely it is to be listed. By listing a property, it celebrates a building’s special architectural and historic features […]

Find out more

Will your second home also be your pension?

Recent research suggests that the level of income people aspire to retire on each year has increased from £35,000 to £42,000 yet this would require a pension pot of more than £1 million. Evidence shows […]

Find out more

Will solar panels increase the value of my home?

As the weather gets colder and darker, and the heating and lights stay on longer, there’s one thing I can predict with even more certainty than the Queen’s Speech broadcasting on Christmas Day. The arrival […]

Find out more

Why do kitchens sell houses?

The party is in the kitchen! When we have a party at our house my wife and I spend hours making our living room look nice and then most of the evening trying to get […]

Find out more