The Government recently amended the coronavirus regulations to restart the housing market in England, including virtual viewings and allowing estate agents, surveyors and conveyancers to return to work. However, Zoopla reported that around 373,000 property transactions have been put on hold as a result of the pandemic – worth an estimated £82bn in property value. While there is great uncertainty surrounding the coronavirus outbreak, the impact of the lockdown on household finances and job security will dictate whether there is a steady increase in pent-up demand.
Following the introduction of lockdown restrictions, the housing market saw a 70% decline in buyer demand and a 42% drop in rental demand. The Centre for Economics and Business Research (CEBR) predicts that house prices will fall by 13% by the end of the year as the transaction volume is likely to plummet considerably. The Royal Institute of Chartered Surveyors also suggested that it could take at least nine months for property sales to recover. This may be because households are loss averse but also due to the evolving economic disruption.
It is also important to recognise the risk of an uneven economic recovery across the country which will affect the growth of regional housing markets. The CEBR forecasts that Yorkshire & Humber and Northern Ireland will face the most significant hit, followed by Wales and the East of England as they have the highest shares of employment within industries such as manufacturing, construction and retail which have come to a halt to reduce the spread of the virus and could therefore encounter mass job losses.
Moreover, Citizens Advice has urged the Government to protect renters as the three-month ban on evictions as part of the Coronavirus Act 2020 is set to end on 25th June. Without further protections in place, the charity argues more than 2.6 million renters will be unable to afford their rent which could lead to an eviction crisis. Thus, it has asked for the Government to accelerate its plans to abolish ‘no fault’ evictions under Section 21 of the Housing Act 1988, which enables landlords to evict tenants without a reason after a fixed-term tenancy period ends; revise the Section 8 possession notice to prevent landlords from evicting tenants who have accrued arrears due to coronavirus; and only introduce a pre-action protocol once such reforms are in order.
The Government is facing increasing calls to bring forward new measures to ensure the revival of the housing market protects vulnerable households as well as establishing medium and long-term initiatives to account for the extensive challenges posed by the pandemic to support a sustainable recovery. Although a number of property experts remain optimistic that the underlying strength of the housing market prior to the pandemic will allow it to bounce back after the easing of lockdown restrictions, the current future is unknown. As the Government has warned, it may become necessary to pause all home moves again to manage the spread of the virus so the housing market is likely to lack stability for the foreseeable future.