COVID-19 has largely impacted the real estate business. It is expected that house prices in the UK will fall (by up to 5% next year) due to an increase in unemployment and the government’s exemption from stamp duty.
Halifax, Britain’s greatest home loan moneylender, says the economic fallout caused by the pandemic would covered-up the gap with the property market in 2021, after a sudden blast during the COVID-19 pandemic. It is anticipating a fall in house costs somewhere in the range of 2% and 5% for the whole year.
Till now we couldn’t see the impact of COVID-19 due to various supportive policies of the government including the furlough scheme, but as this support will continue to downsize by the end of April, there will be a rise in unemployment. It said the impact of the COVID-19 crisis on household finances had been delayed by supportive government policies such as the furlough scheme, but that the gradual scaling back of support next year, with the closure of the wage subsidy program from the end of April, meant unemployment would rise. This will heap pressure on the property market after a sharp increase in prices in 2020.
Russell Galley, managing director at Halifax, believes that as the COVI-19 vaccines are rolling out, the economy will continue to return normal in 2021. There will be a rise in unemployment. Housing business is going to get slow as the stamp duty holiday expires in March. With the identification of new viral strain, Britain’s economy is under pressure, and due to the country-wide lockdowns, the forecast for real estate marketing is highly unpredictable.
Robert Jenrick, the housing secretary, has affirmed the rental markets will not be closed in tier 4 areas across the south-east of England and London. Yet, analysts are repetitively warning that the downsizing of government support and economic fallout is going to reduce the housing prices.
The Office for Budget Responsibility, the Treasury’s financial matters forecaster, expects that house costs will plunge by over 8% one year from now before organizing a fast recovery in 2022. The OBR likewise said there would be a blast in property transactions before the stamp duty holiday ends in March. It is expected that there will be a sharp decline in sale volumes inflamed by a rise in joblessness as the furlough scheme ends in April.
However, Halifax believes that a decrease of decays up to 5% would have a little effect on the growth of average house prices of £18,000, or 7.6%, over the previous year. It also said that many first-time buyers can still not afford the costs. This is mostly aggravated by the economic crisis resulting from COVID-19 driving up disparity.
Gaddy added that, since 2016, the previous year had seen a fastest surge in house prices with mortgage approval being the highest, regardless of the most profound downturn for quite a long time. A move from purchasers has driven this development because of an expanding trend of ‘work from home’ and a craving for more space supplemented with stamp duty holiday presented numerous transactions this year that might have been planned for some time later.