The COVID-19 pandemic has wreaked havoc on the global economy, with its ripple effects paralyzing industrial operations and leaving many families on a shaky economic footing.
But how has the novel coronavirus pandemic affected the London property market?
The housing market in the UK has been unstable for a while owing to many economic setbacks in the region. In September, for instance, London house prices fell unexpectedly as uncertainty around Brexit intensified, putting the industry in a state of flux.
And just when the UK house prices had begun to recover from the uncertainty caused by Brexit, coronavirus came along, sending the UK into lockdown. Nationwide reports that following COVID-19, UK house prices fell 0.1% in June compared to 2019—the first annual decline since 2012. So what are the UK house price predictions post COVID-19? Dive in to find out.
The state of the property market in London
Property markets across the UK have reopened after an extended period of state-initiated lockdowns, meaning you can now attend in-person property showings and buy a home.
Also, all UK governments have temporarily cut stamp duty. Stamp duty thresholds across the UK have risen from £125,000 to £500,000, which means the majority of first-time homebuyers will now be exempt from tax.
The cut in stamp duty is designed to reignite the property market in the wake of COVID-19. The government’s move to raise the tax threshold means home buyers and property investors can save up to £15,000 in tax if they buy property by March 2021.
Home sellers will likely feel the pinch of falling property prices but not for long. The London house price predictions post COVID-19 points to a likely price recovery. Moreover, if you’re a seller, you can leverage the services of a property buying company in London to sell your house fast and hassle-free despite the challenges posed by the pandemic.
London house price predictions after Covid-19
History tells us that property prices tend to fall when the economy shrinks as a result of declining output. And that’s exactly what’s happening in the property market right now due to COVID-19.
The pandemic has caused lenders to reevaluate their lending decisions. For instance, mortgage approvals hit a record low in May, and many lenders including Nationwide, have withdrawn their highest LTV mortgage offers due to concerns over looming price declines.
That said, house prices have been falling since late last year when the pandemic struck and experts believe the prices will fall further this year. Here’s how industry experts believe London house prices will shift after COVID-19.
- The Royal Institution of Chartered Surveyors (RICs) predicts house prices will fall by 4% in the next few months.
- Lloyds Banking Group (which includes Halifax and Bank of Scotland) anticipates a 5% drop after which the economy will recover by 2% in 2021.
- Savills predicts house prices will fall by 5 -10% in 2020 before rising by 4-5% in 2021
- Knight Frank predicts the prices to sink by 7% this year. The agency had earlier predicted that UK property prices will dip by 3% and London property values by 2%.
- More pessimistic forecasts include an investment banking firm Jefferies which anticipates a 20% fall and the Bank of England which predicts a 16% dip in house prices.
As you can see, forecasts vary which is mainly due to the uncertainties surrounding the virus and the expected length of the outbreak. But analysts can agree mostly on one thing: Prices are going to fall with recoveries expected in 2021.