Property viewings have been stopped and estate agents’ offices closed to the public as part of the wide-ranging lockdown measures to contain coronavirus infections. Last week, Housing Secretary Robert Jenrick warned “homebuyers and renters should, where possible, delay moving to a new house while measures are in place to fight coronavirus.” The housing market has undergone a remarkable recovery over recent months, with house prices continuing to increase at the start of 2020, helped by Brexit and reducing uncertainty around the UK’s departure from the European Union.
But the Royal Institution of Chartered Surveyors (RICS) has now warned sales expectations in the next three months have plummeted to minus 92 – the lowest since the monthly survey of the residential housing market began.
This would be down from +26 in February, showing an alarming loss of confidence in the housing market as the coronavirus pandemic and lockdown measures tighten their grip.
RICS’ index of properties for sale – which measures the difference between the percentages of surveyors expecting a price rise and those predicting a price slump – fell to minus 72, while indices for demand and sales fell to minus 74 and minus 69 respectively.
The indices are calculated by subtracting the proportion of property surveyors reporting a deterioration from those reporting an improvement in the under-pressure market.
UK house sales are forecast to plummet to their lowest level in 20 years
The UK housing market has come to a standstill as the coronavirus pandemic takes hold
The alarming forecasts suggest a sharper near-term downturn than in the 2008-09 financial crisis, prompting some economists to predict the largest fall in output since the 1920s.
Sales expectations for the next three months are now the weakest of any time since RICS started surveying its members on this in 1998, and price expectations for the coming months are the lowest since the financial crisis.
RICS’s headline house price balance remained in positive territory for March, before the lockdown took full effect, at +11, down from +29 in February and a forecast in a Reuters poll of economists of +14.
But for three months ahead, the index sank to minus 82. whole looking to this time next year, the index was still trailing at minus 38.
Homebuyers and renters have been urged to avoid moving house
This is a huge blow for a market that was just beginning to show encouraging signs of recovery following the EU referendum in June 2016.
RICS chief economist Simon Rubinsohn, warned: “The legacy of COVID-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.
Hew Edgar, RICS head of government relations, has urged the Government to “start considering medium and long-term measures that could assist a post-pandemic housing market”.
RICS also said in its report: “As agents close their doors due to the lockdown, the spread of the virus across the UK has led to a near standstill of the housing market.
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Boris Johnson and his Government have enforced strict lockdown measures
Robert Jenrick issued a warning to those thinking of moving home
“For those who can afford to move they may lack confidence in the market, adding to the slow down.
“A stamp duty (property purchase tax) holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”
Several lenders, such as Virgin Money, suspended all new mortgage applications until the coronavirus crisis has passed.
Research by estate agent comparison site, GetAgent.co.uk, shows that based on transactions over quarter two of last year, this could see nearly 300,000 property sales fall by the wayside as buyers and sellers across the UK are unable to transact.
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The most severe impact will be across England where last year 237,820 transactions were recorded in the three months between April and June.
Colby Short, Founder and CEO of GetAgent.co.uk, said: “Historic data shows the market could see some 290,000 transactions at risk although, given the early signs of market buoyancy since the election, this could well be in excess of 300,000.
“Our advice would be to keep calm, be patient and stick with it. This is a development that impacts both buyer and seller so hopefully, those property sales that have already been agreed should still materialise once normality returns; bringing a huge boost to transactions in the third and fourth quarters of the year.
“It is now down to the nation’s estate agents to demonstrate their worth by acting as the lynchpin between both buyers and sellers to keep them as informed as possible via any and all channels of communication.”