The global pandemic has affected every area of our lives. Covid-19 has caused a huge change in small things, like the way we buy our food and big things, like the economy. Throughout this pandemic, economists have been making predictions about the way the property market would respond in the wake of Covid-19. Now we’re in a position to see more clearly how accurate those predictions were and dissect how the property market is currently performing.
Seasoned investor, Rex Ekaireb commented: “The UK economy is slowly but surely recovering and getting back to some form of normality which is of course great news. It will take some time to get things back to where we all want them to be, but the initial signs are very positive indeed.”
Rex Ekaireb continued: “Lockdown had a large and negative effect on the property sector in the UK, which was for all intents and purposes put on hold. The amount of lost revenue for businesses, private individuals and the Exchequer has been huge. Getting back to normal and back onto the path to recovery is crucial for the entire UK economy as well as the property sector.”
In May and June of this year, the housing market saw a serious down-turn as lockdown got underway. In June, the average house price fell by 1.4%, which was the biggest monthly drop since the financial crisis of 2009.
Nationwide’s chief economist Robert Gardner, said: “It is unsurprising that annual house price growth has stalled, given the magnitude of the shock to the economy as a result of the pandemic. Economic output fell by an unprecedented 25 per cent over the course of March and April, almost four times more than during the entire financial crisis. Housing market activity also slowed sharply as a result of lockdown measures implemented to control the spread of the virus.”
With mass unemployment, wage cuts, business failures and job uncertainty, many people will likely be more cautious buying a home, so this dip in the property market is not surprising. Usually this kind of uncertainty and economic downturn would see housing prices fall, as we saw in the last recession.
Has There Been a Post-Lockdown Bounce Back in the Property Market?
With so many changes to the way that people are working and more people realising that they can work from home, sites like Rightmove have reported an increase in people searching for houses far away from towns and cities. According to Rightmove people are also looking for houses for large gardens and spaces for home offices. While we can’t be certain that this change is here to stay, it certainly seems as though more people are searching for properties suited to working from home.
While some people are searching for new properties to work from, others are turning to professional renovation to create spaces for remote working. This means that builders and architects stand to benefit as people who feel uncertain about the future of the property market may choose to invest in their current property.
Rex Ekaireb commented on a post-lockdown bounce back: “It is too early to say; whether or not there has been a true ‘bounce back.’ We all hope there will of course be one, but this is certainly too early to say whether or not there has been such a bounce. That said, the signs remain positive, with people coming back to work and making some of those property transactions, something the Stamp Duty holiday the Chancellor brought in is certainly helping.”
In the commercial property space, more dramatic changes have been seen. With more potential customers on furlough or feeling the stress of job uncertainty, the UK high street has seen an acceleration towards decay and disuse. Lockdown has meant even more of us have discovered how much we can buy online. This trend has meant that the high street is continuing to move towards services and away from retail, which means more hairdressers, cafes, beauticians, and less traditional retail stores.
Today we mainly turn to the high street for what we can’t do online. Many rented commercial spaces have just seen a deferral or missing of the last few quarters of rent, but if this trend continues, we could be seeing far less occupied property on the UK high street.
In a time of uncertainty like this, it’s impossible to know exactly what the future holds. However, the more recent changes in the property market give us hope that the UK economy can bounce back. The high streets are adapting to our new needs and buyers are looking for new types of properties.