With the global economy showing indications such as the largest plunge in share prices since the 2008 financial crisis, and China’s economy threatening to contract for the first time in decades, how will the Coronavirus effect the property market?
Housebuilders thus far have been only been slightly affected, with small dips in their share prices.
The below leading housebuilders have been trading lower since mid-February, with their shares;
- Berkeley & Vistry’s – no change,
- Redrow – down over 1%,
- Crest Nicholson – down 0.57%,
- Barratt’s – down 0.03%.
- Taylor Wimpey’s – up 0.24%.
Though these figures do not seem too significant, observers have predicted that the worst is yet to come, with the economy potentially being put into an induced coma until the threat of the disease is passed.
The virus could see construction sites compulsorily shut down for up to 3 months, under emergency measures to contain the virus.
Economics Director at IHS Markit, Tim Moore, said:
“While construction order books have begun to recover in the opening part of 2020, the fly in the ointment is the uncertain impact of the coronavirus outbreak on UK economic growth prospects, A renewed slowdown could see domestic investment spending put back on hold and dampen the outlook for the UK construction sector.”
Having said this, the virus has not yet impacted the desire for property.
Lettings and sales agent Benham and Reeves Coronavirus research shows;
- 83% of home buyers / sellers have not let the virus suspend buying a new home.
- 9% of people stated that they were in the process of buying / selling but have called it off.
- 9% of people originally planning to buy / sell this year have put it on hold.
Showing as the most defiant of the outbreak:
- Scotland – 90% continuing as normal with their property transaction.
- The 65 and over category – 96% categorically transacting on their property purchase / sale.
Showing as the most conscious of the outbreak:
- The North West – 77% continuing with their property transaction.
- The 18-24 category – 30% calling off a current sale / purchase, and an additional 27% deciding not to proceed this year.
A total of 69% of the UK have said that even if Coronavirus became a more serious risk, they still wouldn’t let it stop them buying or selling a house.
Marc von Grundherr, the director of Benham and Reeves, has said:
“We’ve just endured a very prolonged period of market uncertainty that caused many home buyers and sellers to adopt a ‘sit tight and see’ mentality. However, since the end of last year, they have returned in abundance and the market has well and truly sprung back to life.
It would seem that having sat on the sideline for such a long time, and while the threat of the Corona Virus remains at arm’s length for many, the mere suggestion that a global pandemic would now stop them from buying or selling is completely out of the question.
Growth during previous pandemics suggests that house prices will also remain unaffected and while we may see a stutter in foreign investment from areas to have been worst hit, domestically we will soldier on and won’t let it dent our aspirations of homeownership.”
If businesses are forced into quarantine, buyers & sellers may have not choice but to put their plans on hold, however, the sheer demand for homes will safeguard a speedy recovery for the property market.
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