Amid the COVID-19 pandemic, the housing market has gone into shutdown as sales, surveys and a large number of projects have been put on hold. A recent study by global consultancy, Knight Frank has stated UK house sales will collapse this year. Although house sales will drop in the UK, Director of the Association of Homebuyers, Jonathan Rolande told Express.co.uk renters will be the first to be impacted by the virus.
He said: “They’ll be a decline in the rent sector, that’ll be the first to be impacted.
“The redundancies from the virus will be mostly in the sector of the property market where a lot of people were renting.
“Landlords will feel it very badly due to renting drops.
“Couple that with a property being empty and renting pressures or shortage of tenants, means the industry will be hit hard.
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UK housing: Renters to be hit hard
“That may then filter into the sales market.”
Overall, Mr Rolande insisted the housing market may well be able to recover over the next few weeks although if a second lockdown is instituted going forward, the results could be devastating.
In Knight Frank’s assessment of the industry, sales are predicted to drop from 1,175,000 last year to just 734,000 this year.
Although prices may not collapse, they will fall by three percent in 2020, the assessment suggests.
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However, there is a chance that due to a backlog of buyers, more will look to purchase towards the end of the year and into 2021.
Liam Bailey, the global head of research at Knight Frank, said: “The housing market was in a strong position in January and February.
“A sharp uptick in sales and price growth was seen across the UK, with even the prime central London market seeing a reversal of a five-year-long price decline.
“We now have to expect weaker economic activity in the first half of 2020, the dislocation in the jobs market and weakened consumer sentiment will impact on prices – however, the relatively finite timespan of the crisis means declines will be limited.”
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In the latest statistics, UK inflation fell to 1.5 percent in March due to the nationwide lockdown.
The Consumer Prices Index (CPI) fell from 1.7 in February according to the Office for National Statistics (ONS).
Some economist have warned inflation could slide to 0.5 percent in 2020 as the economy shrinks.
Sarah Hewin, senior economist at Standard Chartered bank, told the BBC’s Today programme: “Normally low inflation would be welcomed as it means people have effectively more to spend in the shop but these are not normal circumstances.
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“The fall in inflation, in addition to low energy prices, is an indication of the steep recession we will see in the coming months.”
Economic output could also drop by 35 percent between April-June while the ONS has stated unemployment could rise to 10 percent.
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The current lockdown will be reviewed by ministers on May 7 and could be extended once again.
Some ministers have expressed fears the UK economy may struggle if lockdown measures continue, while Chancellor Rishi Sunak stated the economy will take a significant hit after the pandemic.