The UK property market has enjoyed an uplift over the past few months, but the outbreak of the coronavirus could result in price increases slowing down as fewer people buy and sell homes.
Here, Which? explains what’s happened in the property market so far this year and offers advice on whether homeowners should be concerned about a fall in house prices.
The property market in 2020
Last year we saw a slowdown in house price increases and the number of sales going through, but the property market has enjoyed a big boost since December’s general election.
Data from HM Revenue & Customs shows that the number of residential property transactions increased by 12.7% year-on-year in January, with 102,810 sales going through.
This echoed findings from the property portal Rightmove, which said traffic to its site increased by 7% and the number of sales agreed rose by 12% in January.
And earlier this week, the Royal Institute of Chartered Surveyors said house price inflation is gathering pace amid greater demand from buyers.
What’s happened to house prices?
The most reliable barometer of house prices is the Land Registry’s UK House Price Index.
The most recent data only goes up to December, when it found that overall prices rose 0.3% month-on-month and 2.2% year-on-year. January’s index will be published next week.
The mortgage lender Halifax also publishes its own house price index, but its accuracy has come under question.
On Friday, it announced that house prices rose by 0.3%, marking a 2.9% increase in the last quarter.
Will the coronavirus affect house prices?
It’s too early to say exactly what impact the outbreak will have on the property market, but this is likely to mirror the rest of the economy.
A rise in the number of people self-isolating could mean fewer properties becoming available, and thus fewer buyers viewing and bidding on homes.
In short, more people will be staying put for longer.
Fewer transactions could see house price growth slow right down, but it’s highly unlikely we’ll see any major crash in prices, and – as with Brexit – the market will eventually pick up pace again after a period of uncertainty.
If nerves do creep into the market, buyers and sellers seeking to move home imminently could face struggles due to a lack of homes on the market.
Coronavirus and your mortgage
If you’re looking to move home or renovate your current property, the good news is that it’s a great time to get a mortgage.
Mortgage rates are currently very low, and the Bank of England’s decision to cut the UK’s base rate from 0.75% to 0.25% on Wednesday may help some buyers and switchers.
It’s highly unlikely that the very cheapest mortgage rates will drop much further in light of this announcement, but many borrowers on tracker deals will see their rates fall, and those with small deposits might find it easier to secure a better rate.
So far, the below lenders have pledged to cut their standard variable rates by the full 0.5%, and the coming weeks could see more banks follow suit and others launch headline-grabbing deals.
| Lender |
| Barclays |
| Co-operative Bank |
| Halifax |
| HSBC |
| Lloyds |
| Metro Bank |
| Nationwide |
| Natwest |
| Royal Bank of Scotland |
| Santander |
How are lenders helping homeowners?
Earlier this week, we contacted more than 40 lenders to ask if they were putting any special measures in place to help borrowers affected by the coronavirus, and so far 19 have got back to us outlining their policies.
Major lenders such as RBS, TSB, Nationwide, Lloyds and First Direct are all offering specific help to existing customers, including options to defer payments, avoid late-payment fees and extend mortgage terms.
Many other lenders told us that concerned customers should get in touch to discuss their options.
Check out our full article on what the coronavirus means for your mortgage to find out more.
Which? coronavirus advice
Experts from across Which? have been compiling the advice you need to stay safe, and make sure you’re not left out of pocket.
