The UK property market has enjoyed a mini boom since reopening after the lockdown, but experts believe house prices could fall later this year.
Here, we explain what’s happening to property values and offer advice on making an offer on a house 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?
All UK governments have also temporarily cut stamp duty. This means buyers could potentially save up to £15,000 in tax if they move home before next April.
The cut is designed to reignite the property market in the wake of COVID-19, though there are signs that the wheels were already beginning to turn.
The property portal Rightmove reported 175,000 ‘missing’ sellers between March and May, but says it saw an ‘unexpected mini-boom’ in June after markets reopened around the UK. This resulted in the number of homes coming on to the market rising significantly.
Zoopla is set to release its June report later this week, but says the stamp duty cut could encourage buyers and sellers to bring forward their moves.
How have house prices changed?
It’s too early to tell exactly what impact 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 relaunched its own index this week, reporting that asking prices have increased by 2.4% compared to the period before the lockdown, to reach a record high of £320,265.
While Rightmove’s data gives an indication that sellers are asking more for their properties, its conclusions are based on asking prices rather than sold prices, so it’s difficult to get a handle on how much buyers are actually paying.
Other indices have reported mixed results. Nationwide says house prices fell by 0.1% year-on-year in June, while Halifax found they increased by 2.5%.
- 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.
The predictions below were made before the government announced its stamp duty cut earlier this month.
- Knight Frank predicts a 3% drop this year and a rise of 5% in 2021.
- Savills says prices could 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.
- Economists 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 shows that overall average mortgage rates in June 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 disappearing.
Now the market has reopened 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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You can keep up to date on our latest advice on the coronavirus outbreak over on our coronavirus advice hub.