House Price Forecast: Property market hit by Coronavirus
12 June 2020
By Daisy Stephens
House prices are expected to fall in the next quarter as a result of the Coronavirus lockdown.
Average house prices in England are on course to fall by 3.8% between June and August 2020 based on the values of new deals agreed between March and May, as the strong market performance seen in the first quarter of 2020 was brought to a shuddering halt by the Coronavirus lockdown. Adjusted seasonally, the decline in average values will be 5.1%.
The forecast is based on purchase price data from over 8,000 conveyancing quotes provided by reallymoving between March and May, providing one of the earliest snapshots of the immediate impact of lockdown on the property market and confirming that confidence in property values and the wider economy has been reduced. However it’s important to note that the assumption of a 12-week time frame between exchange and completion could be less reliable.
Annually, house prices are on track to see the first month of negative growth in over a year, falling by 1.4% in August 2020 compared to August 2019.
Rob Houghton, CEO of reallymoving, commented: “We’ll have to wait several months at least before the true impact of Coronavirus on the housing market becomes evident, but early signs suggest that while prices have fallen and buyers have undoubtedly tightened the purse strings, the initial hit may not be as severe as some analysts feared.
“For sellers now facing a period of great uncertainty and a scarcity of buyers, doing a deal at a reduced price of 3-4% could look considerably more appealing than sitting tight and waiting to see what happens over the next few months.
“Transaction volumes are at half their normal levels and the economy is currently propped up by the Government through the furlough scheme alongside mortgage payment holidays, so although the market is open once again, its underlying health has not yet been tested.
“Levels of unemployment and confidence in the jobs market will be key factors in determining whether the housing market recovers in the autumn with a levelling out of prices or continues in a downward trajectory.”
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