Economies around the world have been affected by Coronavirus in one way or another. While online businesses are flourishing, as bored consumers browse the internet for hours on end, high street shops have seen their profits plummet.
Global housing markets have also felt the impact, and it is difficult to assert what the long-term effects will be. It is clear that with the huge wage cuts, unemployment rates, job uncertainty, and business failures, many people are cautious about making a big investment, such as buying a home. As we have seen with the 2007 recession, this usually leads to a dramatic drop in housing prices.
However, so far, the news has been somewhat promising. Although housing prices did go down, many people saw this as an opportunity to buy, which has helped to keep the market afloat.
During the Lockdown
During the UK lockdown, the housing market was effectively suspended. People were unable to leave their house, and therefore unable to inspect houses that they might have been considering buying. According to the Blend Network, house prices plummeting to 1.8% in May, compared with 3.7% in April. Although there is still some good news, whilst May was a particularly bad month, the yearly trend remains upward.
Following the initial relaxation of lockdown, estate agents have seen a surge in demand, which has created upward pressure on prices. Despite what some people might think, now could be a great time to sell. Now could be the perfect opportunity to use an organization organisation such as Fastbuy Properties to quickly sell your property without any hassle.
There will soon come a time where this sudden demand exhausts itself, and house prices could once again fall. Therefore, you should act quickly if you are looking to sell your property. With further restrictions being put in place in the UK, it is unclear how the rest of the year will fair. The government is doing what they can to prevent another country-wide lockdown, but with localized lockdowns already being put in place, this will surely continue to negatively impact the economy and the housing market.
The impact of Working from Home
Another force to consider is the large number of people working from home, even as lockdown measures have relaxed. Many organizations have realized the benefits of allowing their staff to work from home, such as lower operating costs. As a result, offices may never be as busy as before, and the demand for office spaces will decrease.
Rightmove has reported a significant increase in the number of people looking for homes further away from city centers and towns, prioritizing big gardens and a space for a home office. This could be a lasting change.
The lowering need for office and retail space, combined with an increasing demand for rural homes, could drastically change the landscape of the housing market. Office spaces could be turned back into apartments, and individuals will likely continue to move out of crowded cities.
Government Measures to Stimulate Demand
The government is eager to keep up demand, as a housing market collapse could be detrimental to the overall economy. One of the measures they have introduced is a stamp duty cut, which saves buyers up to £15,000 if they decide to take action before the end of the financial year.
This has encouraged many buyers to act quicker than they perhaps would of, to avoid missing out on this opportunity to save money.
What About Holiday Homes?
All of the market forces above also apply to the business of holiday homes. As lockdowns across the world have eased, there has been a surge in the sales of holiday homes. After people have been stuck inside their own home for so long, a holiday home has suddenly become a very appealing idea. The exact figures will take time to work out, but anecdotal evidence suggests a big spike in activity. According to one holiday home provider, Park Holidays, the demand has been exceptional, and sales have been rising to an unprecedented degree.
What is the Situation in the United States?
With such an interconnected and globalized globalised economy, it is insufficient to look at local figures when trying to predict how the housing market will fair solely.
Fortunately, the housing prices in the US continue to rise, albeit at a slower rate. The government has put in measures to protect people, such as banning evictions for 60 to 90 days in some states, and six months in others. Although this is good news for homeowners, it also means that the initial struggles have been put onto landlords and banks, which could have a knock-on effect later down the line, especially when you consider the US unemployment rates, which have soared since the COVID-19 outbreak, which reached a peak of 14.7% in April.