As soon as lockdown was announced in the UK back in March this year, experts predicted that the housing market would see a fall of about 10 percent due to the effects this would have on the economy as a whole. This came just as the housing prices in the market were beginning to recover from the effects of the Brexit uncertainties towards the close of 2019.
The Current Housing Market and Short-Term Predictions
Since May 2020, estate agents have reported a surge in house viewings, partly due to the temporary stamp duty holiday but also because many people are keen on upsizing after months of lockdown-induced claustrophobia.
Focusing on the stamp duty holiday for a minute, potential buyers in England can now save up to £15,000 if they complete their house transaction before April 2021. The cut is, of course, an attempt to reignite the property market. Although house prices in the near term will be largely dependent on the how long it takes for the pandemic to clear, analysts say that the low interest rates alongside supply shortages will limit a tragic fall.
Rodger Jones of the wealth management firm London and Capital believes that the country will experience a modest decline without diving into a total collapse. According to Jones, a rise in unemployment will constrain the purchases of homes, but the collapse recorded in the 2008 global financial crisis will not feature. In the 2008 recession period, house prices in the UK sank to 16 percent. Economists believe that the 2020 crisis will see a more modest fall of 4 percent.
Capital Economics’ Hansen Lu, a property economist, noted there are some key differences between the 2008 crisis and what is being experienced in 2020. First, the banking system, as noted by the economist, has been more resilient, and households are receiving an unprecedented amount of support from the government. Also, interest rates are low, meaning that borrowing is cheap.
Longer Term Predictions
We’re living in unprecedented times at the moment and making any accurate long-term predictions on where both the economy and the housing market will end up would be foolhardy. All we can reasonably do is to look at the data to understand where the market might be heading, but even that can tell a somewhat confusing picture.
Take house prices for example, where according to Rightmove they seem to be on up. However, look a little closer at the data and you’ll notice that their data is based on asking price and not the actual price of houses sold. In fact, for actual sold prices, the Halifax shows an increase of 2.5 percent in June, whereas Nationwide reported that prices fell by 0.1 percent during the same period. Confusing datasets to say the least!
On the whole, property experts believe that there will not be any long-term changes in consumer behaviour as far as the housing market is concerned. In fact, with many organisations embracing the working from home culture, there is now more than ever a demand for housing.
Should You Sell Below the Asking Price this Season?
The answer to this question really depends on your individual circumstances.
If, for example, you’re looking to get the most money from your home and you aren’t in a rush to sell then absolutely not. As mentioned previously in this article, the housing market seems to be holding up remarkably well, buoyed by a post-lockdown influx of new buyers invigorating the market. This is especially true for those people who own homes with a garden, by the sea or in the countryside, as research has shown that they are becoming increasingly desirable.
If, however, you’re looking to move quickly then accepting an offer for below asking price may be worth it, regardless of the fact that the housing market is so buoyant at the moment.