The Guardian reports that the UK housing market is going through a post-Covid-19 lockdown bounce-back, but signs are there according to surveyors and estate agents that any recovery may be short-lived.
Following the Covid-19 lockdown introduced in the UK on March 23, May 13 saw the property market reopen in England, with the number of people looking to buy a home seeing an increase in June along with the number of new properties listed for sale, according to the Royal Institution of Chartered Surveyors [RICS].
Surveyors and agents were largely reported to be busy during June, with some evidence of people looking to relocate from city settings to more rural areas and smaller towns, the Guardian adds. Yet, one thing that RICS made clear is that house prices, which had been in decline, are expecting to fall even further.
Two days before RICS made its forecast, the Halifax building society reported that UK house prices had fallen for four consecutive months, the first time this had been seen since 2010. Halifax indicated that further, if more modest price drops, were expected to persist through the summer.
In June, the Nationwide building society reported that annual house price growth was in negative territory for the first time since December 2012, down 0.1 per cent year-on-year with a month-on-month fall of 1.4 per cent taking the average UK house price to £216,403. The monthly fall was less severe than a 1.7 per cent decline recorded in May.
RICS said: “Looking to the next 12 months, respondents now anticipate a flat to marginally negative trend in house price inflation.”
Mortgage lenders have also begun tightening lending rules and withdrawing opportunities for buyers who can only manage a five per cent to ten per cent deposit.
RICS chief economist Simon Rubinsohn said that there were sharp rises in its data relating to buyer enquiries and new property listings. But he added: “There are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers and the uncertain macro environment, particularly with regard to the employment picture.”
The RICS report revealed a net balance of 61 per cent of surveyors and estate agents –measuring the difference between those reporting increases and those seeing decreases – claimed that they saw a rise in new buyer enquiries over the month. In April and May, that net balance figure stood at -7 per cent and -94 per cent, respectively.
Meanwhile, Nationwide’s chief economist Robert Gardner said that the medium-term outlook for the housing market remained “highly uncertain” despite government efforts to support the economy and jobs likely to ease the impact of the pandemic.
Andrew Montlake, managing director at mortgage broker Coreco, predicts the second half of 2020 as bring a “real test for the property market” as government support for employment winds down and unemployment increases.
For Hiltongrove, a London property firm which focuses primarily on quality residential developments, high-end offices, studios and retail, the Covid-19 rollercoaster and ensuing recession provides another hurdle for the company and managing director Guy Davis to clear, following their raw experience of the 2008 financial crisis.
Speaking to Leaders Council of Great Britain & Northern Ireland interviewer Jonathan White about the firm’s experience of the last recession, Davis said: “The years 2008 to 2012 were the toughest of my life. My personal debt at the time was over 10 million, every quarter I had to pay interest on the debt. It got to the point where I had to use my own company credit card to generate an extra £30,000 in cash every month and then borrow money to pay the interest.
“Of course, there are only so many quarters that you can carry on doing that, But, our success was that we kept on going. To quote Winston Churchill: ‘when you're going through hell, keep on going.’
“Eventually after persevering for as long as we did, I came across a very supportive manager at HSBC bank, and from around 2012 and 2013 things began to turn around for us”.
Having successfully navigated the long economic downturn during those years, there was perhaps cause for optimism in the sense that economists had predicted a much more rapid economic rebound from the recession triggered by coronavirus.
Yet, the UK economy only grew by a modest 1.8 per cent in April, less so than economists had anticipated, meaning a disappointing first step on the road to recovery.
Chancellor Rishi Sunak said that the figures laid bare the “scale of the task at hand” in getting the economy back on track. It may not prove quite as severe and longstanding as 2008, but for Hiltongrove and others in the property sector and other industries, it will still take some effort nonetheless to raise the economy back to pre-pandemic levels.
