Is the UK Housing Market about to crash?
The question on everyone’s mind right now is will the UK Housing Market crash. In this blog, we take a look at current market conditions, how the Covid pandemic has changed the way Estate Agents operate, and whether or not we are headed for a crash.
Since the reopening of the UK housing market and the end of the lockdown, the housing market has experienced a mini-boom. However, with the Government’s stamp duty cut and furlough payments due to end in 2021, people wonder If the UK housing market is heading for a crash?
The UK Housing Market Overall in 2020
Overall, house prices in the UK house increased by 2.5% in the year to August 2020. Up from 2.1% in July 2020. On a non-seasonally adjusted basis, average house prices in the UK increased by 0.7% between July 2020 and August 2020, compared with a rise of 0.3% during the same period a year earlier (July 2019 and August 2019).
The largest growth in average houses prices was seen in the East Midlands with houses growing by 3.6% compared to the lowest growth seen in the North East of just 0.2%
Prime Property seems to be the largest lead factor with the most desirable and expensive homes leading the way. According to data from the agency and Rightmove, this market segment has seen the biggest rise in deals since the lockdown.
Knight Frank says that in the week ending 16th August, the number of homes sold above £1m was double seen in 2019.
What’s Caused This Mini Property Boom?
Simply put, it’s due to a shift in people’s behavior. As a result of being locked down and spending months at home, people’s priorities have shifted. Prioritising a work-life balance seems to be on people’s minds more than ever before, with homeowners looking to move to bigger properties with more space in greener areas. A Larger home and garden can of course house that snew home/garden office. This new behavior shift is all driven by the pandemic and recent government work from home guidelines.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”Franklin D. Roosevelt
Have Estate Agents had To Change How They Operate?
As a result of the pandemic, we have seen a growing online trend among Estate Agents. With many conducting virtual viewings and moving online due to government restrictions.
Recently Estate Agents have had good news, with the Government allowing Estate Agents to continue to trade in the more recent lockdown. Although the government now permits us to carry out in-house valuations and viewings (providing both parties are comfortable), we all still have duty care to the public during this pandemic. Many Estate Agents are still conducting a Virtual approach. It is surprising how quickly we have all adjusted to the new normal.
Some say virtual viewing could well be here to stay. Offering greater flexibility can be extremely beneficial for both buyers and sellers. Buyers can get a real sense of whether they’d like to view the property in the flesh or not after visiting a home virtually.
This also benefits the seller as all the above goes on in the background and does not directly affect them. We think virtual viewings may be here to stay.
Will There Be A UK Housing Market Crash?
It depends on who you talk too.
- Halifax says the housing market will eventually feel the effects of the economic downturn, with ‘greater downward pressure on house prices in the medium-term’.
- Nationwide says the winding down of government support schemes could ‘dampen housing activity’.
- Rightmove says the market is likely to continue performing well in the short-term, but buyers and sellers ‘still need to be mindful of the wider economic concerns’.
- Zoopla believes that growth may slow down in 2021, but says it doesn’t expect house prices to fall before the end of next year.
- The Centre for Economics and Business Research (CEBR) predicts house prices could fall by 14% in 2021.
- You can read more at www.which.co.uk/
Undoubtedly we will see a downturn of sorts in the market next year. How big or small remains to be seen. However, no one is talking about how quickly we could, as a country, bounce back and return to normal with a working vaccine in circulation.
I, like many others, am ready to return to some sense of normality. I am sure after a slight dip, we as a united country will be on an ever-increasing upward curve.