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UK Housing Market through COVID - 19

Blog - Sep 03, 2020

As the whole world battle with the ongoing COVID -19 pandemic, it is having an unprecedented impact on the UK housing market leading to decreased sales, easing of government regulations, and modification in buyer’s preferences. Thus impacting every aspect of how the UK housing market functions.

Current Status of the Housing Market

The housing market in the UK has reopened, which means that estate agents are now allowed to conduct in-person house visits. However, the government guidance advises buyers to have an initial virtual visit (which was used extensively during the nationwide lockdown) to do their preliminary screening. For in – house viewings strict social distancing norms should be followed and masks should be worn by all the involved parties. The house premise should also be cleaned after each visit.

Current House Price

As per “Nationwide” reports house prices have declined 1.4% in June which follows a 1.7% drop in May. The declines are the biggest monthly declines since the financial crisis of 2009. The fall also means that the overall prices are 0.1% lower as compared to last year, a first annual fall since 2012.
The medium term outlook of house prices remains highly uncertain as buyers are extra cautious about investing in a property but there is optimism among experts that it will bounce back relatively quickly. 

Government Regulations

The UK government in order to re-invigorate the housing mark has raised the stamp duty thresholds across the country till March 2021. Now for homeowners buying their first house the stamp duty threshold has been increased to £500,000 from £300,000. For existing homeowners, the limit has been increased from £125,000 to £500,000
The average price of a first home in the UK was around £208,000 thus there will be less incentive for first time average budget buyers. But first time buyers looking to buy an expensive house and existing house owners who are moving up the property ladder will be able to make big savings to the tune of £15,000.  This was validated by “Rightmove” which has seen a 49% increase in properties priced between £400,000 and £500,000.

Consumer preferences

The COVID – 19 pandemic has vastly changed the desired house features of a potential buyer. There is a high demand for properties with two or three bedrooms, homes with office spaces, properties with a private balcony or garden, and proximity to parks. This is a great contrast with pre pandemic desired features of external appearances and a large kitchen. Experts believe that people expect work from home to be the new normal and thus a separate room for working tops the list of desired features. 
There is also a steep fall in buyer’s preferences in tower blocks and built up urban areas with 78% and 58% of surveyed property professionals disapproving of the same respectively. 

Mortgages

There has been a steep decline in mortgage approvals for house purchased, with the May figure down to 9,300 from the April figure of 15,800 as reported by the Bank of England. Approval for remortgages also fell to 30,400 a whopping 40% decline than the pre-pandemic level in February. However, there are still plenty of good rates for people with a bigger deposit.

Final Words

The ongoing pandemic has changed the world economy and every aspect of it. Property sellers need to consider buyer’s preferences while building new homes or remoulding existing ones. The government also needs to provide incentives in the form of lower stamp duty and lower interest rates to provide much needed impetus to the sector.

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