House prices could drop by an average of 13% across the UK because of the coronavirus (Covid-19) outbreak, a consulting firm has suggested.
This new forecast from the Centre for Economics and Business Research (CEBR) said the economic impact of the lockdown measures could significantly disrupt the UK’s housing market.
CEBR predicts that economic uncertainty, falling incomes and fewer house sales will lead to a steep decline in house prices by the end of 2020.
It warned that the largest decreases may be observed in areas with the highest proportion of workers in sectors badly affected by social distancing measures, such as the manufacturing, construction and accommodation sectors.
CEBR expects an average drop in housing prices of 13%, or £38,000. Northern Ireland is predicted to experience the biggest drop, of 16.5%. Wales is expected to drop by 14.5%, the South West 13%, the East Midlands 12.5% and London 11.25%.
Scotland and the South East of England are predicted to see drops of only 10.5% and 11% respectively.
Forecasts Subject to Change
Given the uncertainty over the pandemic’s impact on the UK economy, there have been varied predictions over how it will affect the housing market.
Real estate firm Knight Frank estimated last week that UK house prices will fall by just 3% in 2020, before rebounding by 5% in 2021. Meanwhile, financial services company Jefferies anticipates house prices will collapse by no more than 20% this year, a worst case scenario.
Ultimately, the housing market could be vastly different in six months’ time, so forecasts should be taken with a pinch of salt. Property experts tend to agree that clearer predictions will be possible once lockdown measures have ended.
Experts also concur that the impact of coronavirus could dramatically affect the housing market. Rightmove has previously suggested that the impact of coronavirus could grind the housing market to a halt, and Zoopla has predicted that new sales will suffer a 60% drop in transactions during the next three months.
The reasons for this include viewings no longer taking place, mortgages taking longer to process, and people being discouraged from moving into properties unless the property is vacant.
The current situation marks a vast difference to the end of February, when asking prices were close to an all-time high and the construction sector was reported to have grown at its fastest pace in more than a year.
Construction Challenges
The construction sector has been working within strict guidelines since social distancing rules were introduced, and this has posed a challenge to those embarking on a self build project, extending or renovating a house.
Many major build merchants such as Jewson and Travis Perkins are only operating essential delivery services, which can have an impact on self builders when materials are not available.
Follow our live blog for updates on how the coronavirus lockdown could affect your project and the wider construction industry.