Property viewings have been halted and estate agents’ offices have closed to the public as part of wide-ranging measures to reduce the risk of spreading COVID-19. The Royal Institution of Chartered Surveyors (RICS) said house prices and activity had been picking up since the start of 2020 thanks to reduced Brexit and political uncertainty but the trend has gone sharply into reverse.
The spread of the virus across the UK has led to a near standstill of the housing market
A RICS spokesman said: “As agents close their doors due to the lockdown, the spread of the virus across the UK has led to a near standstill of the housing market.”
The picture from RICS matches that in other economic surveys, which point to a sharper near-term downturn than in the 2008-09 financial crisis, prompting some economists to predict the largest fall in output since the 1920s.
Sales expectations for the next three months are now the weakest of any time since RICS started surveying its members on this in 1998, and price expectations for the coming months are the lowest since the financial crisis.
Even looking a year ahead, surveyors are significantly more likely to expect sales and prices to be lower than higher due to concerns that home-buyers will be worried about their jobs even after the initial disruption has passed.
RICS chief economist Simon Rubinsohn said: “The legacy of COVID-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.”
RICS’s headline house price balance remained in positive territory for March, before the lockdown took full effect, at +11, down from +29 in February and a forecast in a Reuters poll of economists of +14.
But for three months ahead, the index – which measures the difference between the percentages of surveyors expecting a price rise and a price fall – plummeted to -82.
And even looking 12 months ahead, the index was still at -38.
The spokesman said: “For those who can afford to move they may lack confidence in the market, adding to the slow down.
“A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”
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The bleak news from the housing market comes as the economic impact of the pandemic was brought into sharp focus by the Resolution Foundation think tank which warned as many as 11 million workers could be furloughed by their employers at a cost to the Government of up to £40bn for three months.
A survey by the British Chambers of Commerce found six percent of UK companies already faced bankruptcy as a result of the lockdown while 57 percent said they only had enough cash to last three months or less.
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