Property markets across the UK have largely reopened, but experts believe house prices could fall this year as economic uncertainty continues in the wake of the COVID-19 outbreak.
Here, Which? takes a look at what could happen to house prices as the market emerges from the lockdown, and offers advice on making an offer on a property in these uncertain times.
- You can keep up to date with all the latest news on the outbreak on our coronavirus advice hub.
What’s happening to the property market?
The property markets in England, Scotland and Northern Ireland have now reopened, while Wales has partially relaxed its restrictions.
Last year, 1.175m house sales were recorded in the UK, but that figure is set to fall sharply this year.
The agency Knight Frank predicts 734,000 moves in 2020, while Savills places its estimate in the range of 566,000 and 745,000.
Rightmove has reported around 175,000 ‘missing’ sellers between March and May when compared to last year’s figures, but says agreed sales are down just 3% on a year ago.
Zoopla, meanwhile, says the number of properties for sale has dropped by 15% year-on-year, but that pent up buyer demand means transactions numbers are thriving in the short term.
- Find out more: house moves allowed once more as lockdown eases
How have house prices changed?
It’s far too early to tell exactly what impact the coronavirus will have on house prices, and it’s likely that the figures we see in the coming months will fluctuate significantly.
The most reliable barometer of house prices is the Land Registry’s UK House Price Index, but this has been suspended until further notice due to too few transactions taking place.
Rightmove published its monthly asking price index without a headline figure in April and May, but in June’s index it said asking prices in England were up 1.9% when compared to the period before the lockdown in March.
Nationwide reported year-on-year house price growth slowing to 1.8% in May, while Halifax reported a slightly higher increase of 2.6%.
- Find out more: should you pay attention to house price indices?
House price predictions
Experts across the board expect the property market to take a hit this year, though many believe it will bounce back relatively quickly.
- Knight Frank predicts a 3% drop this year and a rise of 5% in 2021.
- Savills says prices cold drop by 5-10% this year before rising by 4-5% next year.
- Lloyds Banking Group (which includes Bank of Scotland and Halifax) says prices could fall by up to 5% before recovering by 2% in 2021.
- Zoopla says a release of pent-up demand could see prices rise by 2-3% in the next quarter, before dipping later in the year.
- A Reuters poll of property experts claims prices will drop 5% this year, before rising by 1.5% in 2021 and 3.5% in 2022
- Economics at PricewaterhouseCoopers say economic uncertainty will see people put off moving home, meaning a ‘swift bounce back’ of the housing market will be unlikely.
Should you offer below the asking price?
If you were looking for a home before the lockdown and are now resuming your search, you might be in a good position to grab a bargain.
As the market gets moving, buyers may look to test the water by offering below the asking price for properties to see if they can tempt sellers amid uncertainty over house values.
As we mentioned earlier, it is likely that house prices could take a dent this year, so if you’re thinking of moving now it’s important to be aware that you might not see any financial rewards in the short term.
When considering how much to offer, do your research and remember that the estate agent works for the seller so will be looking to get as high a price as possible. If you’re unsure, consider taking advice from another agent or specialist buying agent.
- Find out more: how to make an offer on a house or flat
How will house viewings work?
During the lockdown, estate agents began offering video house viewings, and these will still play a part.
The government’s latest guidance says buyers should use virtual viewings to filter properties, and only view homes in-person once they’re seriously considering making an offer.
In-person viewings must follow social distancing measures. You must wash your hands when entering homes and avoid touching surfaces. If social distancing isn’t possible, both viewers and agents should consider wearing a face mask.
- Find out more: should you buy or rent based on a video viewing?
Is it possible to get a good mortgage deal?
Since the lockdown began, the number of mortgage deals on the market has halved, but there are still plenty of good rates out there – especially if you have a bigger deposit.
Data from Moneyfacts released earlier this month showed that overall average mortgage rates were at the lowest levels since it began keeping electronic records in 2007.
Buyers with deposits of 5% and 10% have been hardest hit by deals being withdrawn, with nine in 10 low-deposit mortgages falling by the wayside.
Now the market has re-opened and in-person mortgage valuations are permitted, we may see some deals return in the coming months, but those with the smallest deposits are likely to have to wait the longest.
- Find out more: banks withdraw low deposit mortgages
Which? coronavirus advice
Experts from across Which? have been compiling the advice you need to stay safe, and to make sure you’re not left out of pocket.
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- Coronavirus: how to protect your pensions and investments
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- Coronavirus: your travel and consumer rights Q&A
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- You can keep up to date on our latest advice on the coronavirus outbreak over on our coronavirus advice hub.