March 27, 2020 12:31:27 PM
The housing market is expected to grind to a near-halt over the coming months amid measures to help limit the spread of coronavirus.
Here is a look at why:
– What measures have been announced?
The Government is encouraging people to amicably agree alternative dates to move at a later time.
Meanwhile, UK Finance, which represents lenders, says customers who have already exchanged contracts will have the option of extending their mortgage offer for up to three months.
This will take some pressure off the market and enable people who had been on the brink of moving to put their plans on ice for now and pick them up again at a later date.
– Will all house sales be put off?
No, a limited number will still go ahead.
Government guidance says that an exemption has been made in emergency coronavirus enforcement powers for critical home moves, in the event that a new date is unable to be agreed.
House moves may also go ahead where the property being moved into is already vacant. And property professionals point out that landlords may still want to go ahead with the purchase of properties which are already let out as buy-to-let investments.
– What could this mean for house sales in the short-term?
Property website Zoopla says transactions could fall by as much as 80% in individual months this spring, compared with the same months in 2019.
– What about prices?
Zoopla has said it does not expect to see a material change in house prices in the next month or two. Those who may have been thinking about buying or selling may simply put it off.
Low mortgage rates and mortgage help from lenders for those affected by coronavirus should help to minimise the risk of any “forced” sales, where people become desperate to sell up and therefore may be willing to slash their asking price.
– And looking further ahead?
While it is far from clear what could happen, Savills suggests that housing transactions may return to typical levels by the middle of next year.
But this expectation is based on Government measures to support business meaning the country manages to avoid significant long-term economic damage.
The future outlook for the housing market will depend on the wider economy and lenders’ willingness to lend, how many people are able to hold onto their jobs – and how confident potential home buyers feel when current emergency measures subside about committing to major purchases.