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What effect is COVID-19 having on property prices?

Property Sourcing

What effect is COVID-19 having on property prices?

Property prices are surely of interest to any landlord, so what impact is the COVID-19 crisis likely to have on the housing market?

Property experts Savills say the crisis may cause higher levels of caution, at least until stock market stabilisation is seen. The limits on movement also mean that business as usual isn’t possible, and there is likely to be a wider economic impact.

However there has already been an interest rate cut, plus government spending to stimulate the economy. Property investments should remain to be seen as a solid investment in uncertain times, which should help to maintain values. Savills thus predicts a brief hiatus, not significantly affecting long-term prospects.

According to The Guardian, however, the housing market may “collapse… as the coronavirus pandemic puts (it) into deep freeze.” However the newspaper cites Knight Frank, who say the drop should only be around 3%, before a 2021 recovery.

Mortgage broker John Charcol predicts that house prices may fall 10% this year. During April, May and June, they estimate that sales figures will fall to a level lower than in 2009, at the lowest ebb of the credit crunch.

Savills say that remaining “pragmatic on pricing” is key during 2020, while agency James Pendleton state that “Covid-19 has brought brutal new meaning to a frozen market.” They are, however, optimistic regarding a strong comeback in 2021, fuelled partly by low interest rates.

According to Today’s Conveyancer, the pandemic will have a “huge impact”, and the property industry would not be surprised by “a similar reduction in sales” to those seen after the last recession.

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