Experts predict a 3% drop in housing prices during the year and advise sellers to postpone the sale - The Telegraph.
The impact of coronavirus on the real estate market is bilateral.
Firstly, the sale viewings process hit rock bottom due to the social distancing policy. Buyers cannot view properties and documents can’t be signed on the spot, as it was done previously. It is expected that from April to June this year, the number of successful deals will be reduced by 40%.
Secondly, the economic consequences of the outbreak and measures to reduce its spread caused the UK economy to shrink. Capital Economics expects GDP to fall by 15% from April to June compared with the first three months of this year. There will be less money.
But both of these factors will have a limited effect on the bigger picture. It is imperative that the market will be supported by government measures for mortgage lending. This will significantly delay the start of forced sales, which means it will continue to support housing prices.
Is now the best time to purchase a property?
The Bank of England has slashed its base rate by half a percentage point to 0.25%, the steepest rate cut since the 2008 financial crisis. This reduces variable rate mortgage transactions, consequently benefiting the buyers. Lloyds Bank, Halifax, Bank of Scotland and Barclays have announced that they will present new variable rate mortgage offers in early April 2020.
Now there is an excellent opportunity for first-time buyers. This is due to the fact that interest rates for people who borrow from 90% to 95% of the value of their property are at the lowest level in comparison to recent years. Professional investors are using the time today to seize the opportunity of making a profitable deal during this major economic shift.
Is now the best time to sell a property?
Today, the number of house viewings decreased by 75%, and it is expected that this figure will fall even more. Therefore, it will be more difficult for people to sell the property at this moment in time. On the other hand, sellers have nothing to lose by putting their property on the market.
Capital Economics believes that the slowdown in the real estate market will last no more than three months, which means that there is no reason to worry. The demand will recover once the strategies are re-established, and the threat of the virus is reduced. Currently, many agents, including UK Property Advisors, offer virtual viewings.
Is now the best time to re-mortgage?
Interest rates have now notably fallen, which means that those who have high mortgage rates can reduce those by re-mortgaging.
Some mortgage rates are now less than 1%. Natwest, for example, offers only 0.74%. Most mortgage rates are now without early repayment fees.
However, only about 10% of new mortgages are given at a variable rate, and the rest are offered on a fixed basis. Lenders did not lower interest rates on their fixed transactions after lowering the bank rate, and some even increased them for new customers.
Nevertheless, some homeowners will choose the more expensive fixed-rate option because of concerns that interest rates will recover quickly.
UK government is doing everything in their power
Currently, the government has announced that all homeowners will be able to qualify for a three-month break in paying off mortgages if they cannot pay due to the current situation. No penalties will be charged, and the credit history will remain clear.
The government also stated that no tenant could be evicted from his home during the crisis. Moreover, the government is working on launching a program aimed at providing more direct assistance to tenants.
It has been announced that local councils will be offered 500 million pounds to provide financial support to economically vulnerable individuals and households. Furthermore, new measures to support the population were agreed with the energy sector. The rules will ensure that all vulnerable consumers are not to be disconnected from the power supply until the situation is taken under full control.