Covid-19 & the Property Market
A short shock followed by a rebound?
There is a consensus amongst economic forecasters that the coronavirus has inflicted a short, sharp shock which is affecting all aspects of the property market. However, it’s important to note that the brunt of this has been on the transactional level rather than values. What this means is that values will not fall as transactions falls, and as long as the government can soften the economic impact through its stimulus package for the economy recently announced, then some sense of normality will be resumed once the tighter restrictions of movements are lifted. We will likely see a return to levels immediately before the coronavirus around the later part of this year and beginning of 2021.
The start of 2020 bought a strong platform for UK house prices as transaction levels were high now there was political and economic certainty about the path the UK was going down. Covid-19 has bought a shock to the system which will mean that the demand for transactions are postponed as the system reboots itself.
Research already undergone by Oxford Economic (March 16th) shows that GDP will fall by 2.5%, but then will show a sharp rebound by late 2020 by 1.8%. With low interest rates, and government stimulus packages, these measures will soften the short-term blow.
As restrictions on movement are lifted, we will begin to see an increase in transactional levels as pent up demand will be a driver to normality over the coming months. In the meantime, Tarquin Jones are focused on offering the best property investments for our clients, and have excellent opportunities which are resilient to the current climate.