After effectively freezing the UK housing market when lockdown was implemented, the government has given the go-ahead for property viewings, moves and in-person valuations in England. However, few expect a quick bounce-back in activity, with safe working protocols adding complexity and cost to proceedings and the extent of the longer-term economic downturn still unclear. Here are some of the key questions investors should be asking about the future of the property market.
Are we likely to see a downturn in house prices?
The consensus within the property industry is that UK house prices will fall this year, but forecasts vary significantly over how large that decline will be. At the more pessimistic end, the Centre for Economic and Business research forecasts a 13 per cent correction, while Knight Frank puts the average price reduction at just 3 per cent. Both purchase and sales instructions fell in sync in April, according to research from the Royal Institution of Chartered Surveyors, which could mean there is an element of pent-up demand in the market that could provide a fillip to transactions in the coming months. However, rising unemployment and a potential reduction in mortgage lending at higher loan-to-value ratios present a threat to demand and transaction prices.