LONDON - May 27, 2020 - As the lockdown progressed into months in the UK, the property transactions on hold have reached 373,000, with the figure estimated to culminate at approximately £82 billion. With the current economic situation of things dictated by the lockdown, there are different predictions instigating fears that the market might experience a seismic fall in house prices in the coming months.
Eitan Eldar says, "The lockdown caused a drastic drop in the demand for residential property between March and April. The lower demand wasn't due to the lack of faith in the economy; it was as a result of the restrictions instated by the government during the lockdown. Moreover, we have confidence that once the housing market properly reopens for business, even within a short period, house prices will return what they were before the pandemic."
Some experts in the other camp project that by the end of 2020, house prices in the UK might plummet by as much as 13%. They based their project on the level of high uncertainty, decline incomes, and fall in the number of transactions in the real estate market.
Although both the short and long-term effects of the COVID-19 pandemic are severe, many signs are indicating that the real estate market would pick up faster than other industries once the lockdown is relaxed fully.
How Stable Would House Prices Be In The UK After The Lockdown
The economic impacts of the coronavirus pandemic have been dire on all sectors, distorting the usual way of doing businesses and leaving companies with no choice but to adopt new methods of conducting business. And the real estate industry would also feel some of these impacts on the stability of house prices.
Eitan Eldar says, "Sellers are waiting for the lockdown to end to sell. Residential property prices will remain stable. On the other hand, commercial real estate prices will probably drop significantly. As we all know, more companies have changed their means of operation to enable employees to work from home, and more people now purchase goods online."
2020 was projected to be a year of a market boom in real estate considering the high level of uncertainties caused by last year's election as well as Brexit, where investors delayed their plans. There is still more that can happen in the fourth quarter of the year once the country is out of the lockdown and consumers' confidence returns.
"We might see a 5%-10% decrease in residential real estate prices after lockdown, which will last for a few years, but in the long run, the UK's residential real estate market is a safe investment". Concluded, Eitan Eldar.
