The current coronavirus pandemic has people wondering about house prices, in particular, if house prices in London are falling. The data suggests that house prices – and overall sales – are indeed on a downward spiral. Property website Zoopla predicts that house sales will fall by around half for 2020 compared to 2019.
The number of sales across the UK was actually on the rise until recently. Property sales were up 11% over last year until lockdown officially began in March as a response to the COVID-19 crisis.
The government said that home buyers should delay moving home while the measures were in effect. Sellers could still advertise their property as they wanted but were warned against letting people into their home for a showing. This lead to an increase in virtual house tours and showings, which helped keep the market afloat during the downtime.
Rather than being outright canceled, many home sales are on hold until they can go through. Some 373,000 property transactions – worth a total of £82bn – are on hold while the measures are in place.
These property transactions are likely to go through further down the line, but the latest forecasts from Zoopla suggest that only half as many homes will be sold in 2020 compared to 2019, thanks to these delayed sales.
Analysts believe that house prices are likely to drop this year, especially if the coronavirus pandemic causes economic shrinkage. Frank Knight estimates that house prices will drop 3% for the country as a whole, with a drop of 2% for London in particular. Estate agents in London echoed the predication for a 2% price drop in London.
While things are looking bad for this year, experts do think that the market could recover well in 2010. Indeed, the market was already recovering well before things came to a halt. Knight Frank predicts that house prices could jump back up another 6% next year if all goes well.
One thing to keep in mind is that the government is almost always willing to prevent a housing market crash. No government wants to sit through a house price crash and so will go to any lengths to bail the market out. Even so, there is a small chance that the government will allow house prices to drop a little so that they become more affordable. There’s no denying that many younger people are priced out of the market right now. It may not be the worst thing in the world for house prices to drop a bit.
While house prices have dropped in the short-term, there’s no telling what will happen in the long-term right now. We’ll get a better understanding of the future of house prices once the market opens back up again. Many of those transactions currently on hold will likely fall through due to changes in circumstances.
No matter what, though, the UK housing market has proven to be one of the most resilient housing markets in the world. It will always recover eventually.