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UK house price growth to remain positive over the next quarter – Zoopla

The latest Zoopla House Price Index has been published, with the bulk of new pricing evidence coming from sales agreed before the lockdown.

Data on pricing for new sales agreed in the last four weeks is starting to feed through and points to a resumption in the upward pressure on house prices seen at the start of the year.

As an example, average asking prices for properties marked as sold on Zoopla, which were rising at 7% in the first three months of the year, have returned to registering a similar growth rate over the first two weeks of June.

Near-term outlook for house prices

Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla expects will show sustained UK house price growth of between +2% to +3% over the next quarter, once they feed into the index.

While some have forecast annual house price falls over calendar year 2020, the portal expects any price falls in the house price indices only to crystallise in the final months of the year.

Economic impacts of COVID-19 to hit home in H2 2020

After an initial rebound, demand is expected to weaken over the summer months as the economic impact of COVID starts to materialise, with figures reported last week by the ONS indicating an acceleration in unemployment.

Caution amongst lenders and more limited availability of 90% loan to value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who, over recent years, have been the engine of the housing market.

In 2019, a fifth of all homebuyers purchased a home with a deposit of 10% or less, so a decrease in the availability of 90%+ LTV mortgages could preclude this cohort of would-be buyers from entering the market, effectively reducing demand.

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Government and central bank support will continue to play an important role in how the economy fares with a knock-on impact for the strength of consumer sentiment.

Retail sales, for example, rebounded more than many expected in May.

While almost a fifth of mortgage holders have taken payment holidays, borrowers are able to take these up until the end of October 2020, meaning support is extended for the rest of the mortgaged sector up until April 2021.

Further support and innovation to support the economy and the housing market cannot be ruled out in these unprecedented times, which will limit the downside, albeit not completely.

Strongest sales rebound in northern cities

New sales agreed, subject to contract, have grown the most in England where the market is open for business.

The rebound in sales has been strongest in northern England, led by Leeds, Sheffield and Manchester where sales are up to 20% higher than in February 2020.

In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale.

Level of homes for sale (inventory) in these cities is significantly lower than last year.

While the new flow of homes for sale is back to pre-COVID levels, the number of homes for sale per estate agency branch is 15% lower than a year ago.

This is a result of the market closure at what is a busy time of year.

Stock levels in Cambridge, for example, are up to 40% lower year-on-year.

Zoopla says that the lack of supply supports their view of house price growth holding steady in the short term.

House price growth

UK house price growth is up 2.4% on the year, and has increased from 1.6% at the start of 2020.

The 20 city index registered slower growth over May, slowing to +2.1% from 2.4% in April as less pricing evidence dragged the growth rate lower.

The city with the highest rate of house price growth over the past 12 months is Nottingham (4.3%), followed by Manchester (3.9%).

Meanwhile, Oxford (-0.6%) and Aberdeen (-2%) have recorded modest price falls.

Regional momentum

Activity levels are expected to rebound in Scotland, Wales and Northern Ireland as these markets reopen and pent up demand is released.

These countries account for less than a fifth of UK housing sales but more activity will support headline measures of demand and market activity in the immediate term.

The Welsh market opened on Monday but demand for homes has been building since the English market reopened, gaining momentum over the last two weeks.

Demand for housing in Wales has now rebounded close to what has been recorded in England.

Sales agreed, however, remain 65% lower than pre-COVID levels in Wales as the physical viewing of property has not been permitted.

Zoopla expects sales volumes to increase over the rest of June and into July, mirroring the rebound in England.

Scotland’s market, which reopens later in June, has seen a similar trend with demand recently returning to pre-COVID levels, but with sales volumes lagging well behind.

Commenting on the findings Richard Donnell, Director of Research & Insight, said:

“The rebound in housing market activity has taken many in the industry by surprise.

“It is welcome news given the projections for falling economic growth and rising unemployment.

“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.

“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown.

“House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.

“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years.

“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.

“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”

Source: Property Industry Eye

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UK house prices holding up as city folk flock to the country

The number of city-dwellers pursuing their dream of a rural idyll is on the rise. And despite the pandemic, UK house prices are holding up well, says Merryn Somerset Webb.

What do you want right now? Immediate freedom to go to the Italian lakes aside, I bet that near top of your list is a bigger garden. If it isn’t that, it will be a home office or two, or perhaps an intergenerational living annexe – so if lockdown ever comes again you won’t have to go three months without seeing your family.

Whatever is on the list, the odds are you want the house itself to be in the country. In an ideal world your new bigger garden comes with a pool, a tennis court and a teenage bunk house scattered around its many acres.

I don’t want to spend another lockdown in a city (I don’t actually want to spend another day in my city) and around the world, an awful lot of people seem to feel the same. The New York Post reported this week that “frantic” Manhattanites were spilling out of the city into the suburbs, snapping up houses real estate agents had begun to think they would never sell – sometimes sight unseen. Want a five-bedroom colonial style home in Connecticut for $1m? You’d better rush.

You can see the same feeling in the data in the UK. Listings of properties to let in London have surged. Estate agents working within a few hours of London are telling stories of buyers flooding to the countryside, willing to pay almost anything for big houses they wouldn’t mind getting stuck in (Cornwall has gone nuts too). Rightmove reports that searches for houses with gardens were up 42% last month compared with last May.

People who used to care for nothing but kitchen islands and central London postcodes are now obsessing over online photos of raised vegetable beds and croquet lawns. The interest in the market isn’t just anecdotal. Savills saw agreed deals rise 108% on the week last week and exchanges up 53%. Wider market data from TwentyCi shows a 54% increase in the number of properties marked “sold subject to contract” across the market in the past week – and a 99% increase over £1m. If you live in London now and thought that a Surrey Hills house was beyond you before, it almost certainly is now. The rich move fast.

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No real risk of a house price crash

And prices? You’d think that in the wake of a global pandemic you’d already be seeing a bit of a slump. It isn’t necessarily so. Nationwide reported prices down 1.7% in May. That’s a nasty number if you annualise it. But there were so few transactions last month that this number is all but meaningless. Of more interest should be the fact that prices now appear to be more or less flat on where they were a year ago.

So what next? In the short term at least, it seems clear that there is to be a rebalancing of city and non-city prices. What of UK house prices as a whole? Here, things are a little less obvious. House prices are about sentiment, of course. But they are more about the availability and the price of credit and would-be buyers’ incomes.

When prices fall properly it is usually when unemployment rises fast and those who can’t meet their mortgage payments become forced sellers.

Unemployment is likely to rise fast as the furlough scheme comes to an end: ask around and you will hear company after company reluctantly starting redundancy consultations. However, not only could the bounceback be stronger than expected, but a good many households are in considerably better shape than they were pre-lockdown.

Numbers from the Office for National Statistics suggest that the lack of spending opportunities should have allowed the average household to save £182 a week for the past nine weeks, while analysis from Wagestream suggests that 52.5% of those who still have jobs “feel better off than usual.” Demand for payday loans fell 61% in the first three months of this year and in March alone UK consumers paid down a whopping £3.8bn of debt.

Add to this the fact that the banks are keen to not be the baddies in this crisis. They have offered easy access to the mortgage holidays mandated by the government, taken up so far by 1.8 million people, says UK Finance. It’s a reasonably safe bet that they will be firmly encouraged to show exceptional forbearance to those who can’t pay in full when the holiday period is up, too.

At the same time, while rates on very high loan-to-value mortgages have crept up a tiny bit – and some lenders have pulled out of this part of the market – rates overall are low and likely to stay low for now (at some point the levels of stimulus we are seeing will cause inflation, but not quite yet). This week Skipton Building Society reintroduced 85% loan-to-value mortgages and cut rates on lots of products. How does a five-year fix at 1.35% sound to you? Sounds good to me. Skipton is also accepting mortgage applications from furloughed workers, which has to help.

We might also see new government schemes put in place to support prices (there’s a scheme for everything else). This is not the kind of environment in which forced sellers cause a crash.

But prices have become more affordable

The final point to note is that UK house prices aren’t as stupidly expensive as usual at the moment. They have been fairly flat in real terms for a couple of years now and have gradually become more affordable as a result. Those who think that this crisis will spell the end for prime London property (a mistake I often make) might also note that by the end of last year prime central London prices were already down more than 20% from their 2016-2017 peak. That’s not a place collapses usually begin from. They might also note that while 2020 is not 2008, prime central London prices rose an astounding 26% between March 2009 and January 2010.

You will think from all this that I am predicting rising house prices. Buy, buy, buy! I’m absolutely not (that would be out of character, for starters) and nor is anyone else. Savills sees prices down at least 5% this year and Capital Economics sees them down 4%.

There are lots of brakes on this market. The pent-up demand that is running our poor country agents off their feet will slow. The implosion of the buy-to-let sector will bump up supply. There may well be wealth taxes on the way (any liability added to a house cuts its value) and if inflation does kick off, interest rates will have to rise.

My best guess (and my hope) is that house prices will stay flattish in nominal terms and perhaps fall in real terms, a situation that will suit almost everyone. My only worry? That I am on the wrong side of the city-country trade.

By Merryn Somerset Webb

Source: Money Week

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House prices UK: where they will rise in 2020 – and where they will fall

House prices are still rising in parts of the UK, despite the property market having stood still for nearly two months between March and mid-May, when property viewings, mortgages and evaluations were finally allowed to resume.

Despite the grim prognoses by many property experts and financial think tanks, the latest house price Index by Zoopla reveals that many of the country’s regions are continuing to grow, with house prices up significantly from last year.

The most interesting finding in the latest issue of Zoopla’s monthly research is the fact that the growth trend in the north of England and the Midlands appears not to have been disrupted by coronavirus, at least thus far. Nottingham is showing a 4.1 per cent growth year-on-year in April – the highest rate in the UK.

Leicester, Manchester, and Leeds are showing house price increases of between 3.1 and four per cent, which is not surprising given that these cities have had a boost from regeneration projects and attractive buy-to-let developments aimed at students and young professionals in recent years. These cities remain a solid option for buy-to-let investors in particular.

Edinburgh is another city on the city index list that is showing strong house price growth of 2.9 per cent, which again proves that in the longer term, it’s not coronavirus that will determine house prices, but ongoing regional trends. Edinburgh has been experiencing something like a London housing bubble for quite some time, with demand for its period housing stock far outstripping the limited supply. The Scottish capital is unlikely to see a downward house price trend any time soon.

The London property market is showing signs of recovery, with a very modest rate of growth of 1.1 per cent – which is, nonetheless, a substantial improvement on last year’s drop of one per cent. It is likely that the pent-up demand now being released is boosting house prices in London, but home owners who were hoping to sell at a profit might be disappointed.

Finally, the cities that have seen noticeable house price drops in April are Oxford (-0.8 per cent) and Aberdeen (-1.7 per cent). Although they are located on the opposite sides of the UK, these two cities have one thing in common: a reliance on industries (oil and higher education) that have been severely disrupted by Covid-19, which may explain the slowing down of their property markets. If you live in either, we’d hold off selling, at least until there is some degree of a return to normal life.

BY ANNA COTTRELL

Source: Real Homes

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House prices dip by 0.6%

Average property prices fell by 0.6% between March and April, Halifax’s House Price Index has revealed.

Prices averaged £238,511 in April, after mortgage approvals fell by 24% between February and April.

Annual growth still stands at 2.7%.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Lockdown restrictions are rendering these and other housing market surveys fairly meaningless.

“It is only when you look behind the figures that a more interesting picture emerges – in other words, what we are seeing on the ground are previously agreed sales proceeding to exchange and completion without price renegotiation and a buildup of browsing interest as buyers and sellers ready themselves for easing of restrictions.

“Buyers and sellers are also taking advantage of interest rates remaining low for the foreseeable future.

“Overall, we are being told that transactions are stalled and will be revisited as soon as it is safe to do so and particularly surveyors and removers are able to gain access to properties.”

Paresh Raja, chief executive of Market Financial Solutions, said: “In my opinion, this short-term fall in house price growth is likely to open new opportunities.

“Given the drop has been nowhere near as bad as initially predicted, buying a property now could result in notable price growth once COVID-19 has passed and the market recovers. After all, history has shown that the property market is able to bounce back quickly from crises.

“The challenge for buyers, however, is finding lenders who are still receiving new loan applications and have the resources to undertake on site valuations. As a result, I’d expect to see a general increase in the number of buyers looking beyond high street banks to specialist lenders for loans during this pandemic.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House price growth rose by 3.7% in April

Annual house price growth rose to 3.7% in April 2020, up from 3% in March, Nationwide’s House Price Index has found.

Monthly prices rose by 0.7% to £222,915, as Nationwide said the impact of the pandemic is not fully captured by the data.

Robert Gardner, Nationwide’s chief economist, said: “In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum. Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.

“But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period.”

He added: “The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.

“But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a rebound once the shock passes, and help limit long-term damage to the economy.

“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”

Tomer Aboody, director of property lender MT Finance, said: “Nationwide portrays a confident housing market with the fastest rate of growth in prices since February 2017. Of course, lockdown will affect sales and prices, but that is the reason – people are locked down, surveyors cannot value properties and would-be buyers can’t view them.

“There is still huge demand for property and buyers are confident about the market, which wasn’t the case in 2008. Then, the financial system was devastated; this time, lending isn’t an issue and banks remain keen to lend.

“There will be the inevitable slowdown of transactions but once lockdown has been lifted, huge pent-up demand which should take the marker back up.”

Miles Robinson, Head of Mortgages at online mortgage broker Trussle, said: “The Land Registry data released this week shows that property sales collapsed by 40% during March, which is perhaps a more representative picture of how the Coronavirus is beginning to affect the housing market.

“However, we have seen lenders that had previously hiked LTV thresholds at the beginning of lockdown begin to loosen restrictions and, with the COVID-19 exit plan due to be published next week, we could see the market start to shift back into action.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Rightmove puts house price index on hold

Rightmove has temporarily halted its monthly house price index following the coronavirus (COVID-19) lockdown.

Its final set of data (for now) found that the total available number of homes for sale has fallen by just 2.6% since lockdown.

There were some 65,531 new listings on the site between 8 March and 11 April – compared to 112,570 between 10 March and 6 April 2019.

But the property portal said this marked an “abrupt turnaround from the best start to a year since 2016”, adding that before lockdown sales had been up 11% year-on-year.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘The latest Rightmove survey confirms what we have been seeing on the ground – our offices may be closed but the market is anything but quiet.

“Buyers and sellers are pausing, not cancelling sales, or listings, while continuing to access websites readying themselves for when lockdown restrictions are eased.

“But the market cannot re-start in isolation. We need surveyors to work with lenders, agents, and solicitors to ensure successful transitions as well as continuation of social distancing and safe visiting.”

Despite listings continuing Rightmove has said it will park its index for now.

Miles Shipside, Rightmove director and housing market analyst, said: “Given the lockdown and pausing of key activities in the housing market, statistics on the number of properties coming to market, new seller asking prices, and new sales agreed are not meaningful.

“You do not have a functioning market when buyers can’t buy and sellers can’t sell.”

By Ryan Fowler

Source: Mortgage Introducer

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House price indices to continue publishing despite scarcity of property data

The major house price indices are remaining resolute in publishing their monthly figures despite the property market being on lockdown.

The accuracy of house price indices are questioned at the best of times and now with limits on valuations, completions and lenders busy with requests for payment holidays, it is hard to see how an accurate picture can be provided.

Residential market analyst Neal Hudson has suggested indices could be suspended

He said in a market outlook: “The very low levels of transactions we should expect over coming months will make it difficult to measure house prices accurately, so we might expect the temporary suspension of some house price indices.

“There is the additional challenge that any transactions during the affected period will not be representative, reflecting unique circumstances bringing buyers and sellers to transact.

“We could, if data is still published, see some substantial price falls (10% or more) reflecting the stressed position of any sellers and the risk appetite of the buyers active during this period.

“However, these transactions would not necessarily be representative of pricing when activity recover.”

So far, only conveyancing and removals comparison website Reallymoving has said it will stop its regular house price reports that are based on quotes requests it receives.

The website said in a statement: “In light of the current lockdown and the impact on the housing market, Reallymoving has taken the decision to temporarily pause its monthly house price forecast.

“The analysis is based on the assumption of a typical 12-week delay between an offer being agreed, at which point the buyer/seller comes to reallymoving for a conveyancing quote, and completion.

“This gives us an insight into likely completed sale values three months ahead of the publication of Land Registry Price Paid data and the forecast has historically tracked the Land Registry very closely.

“However, with the vast majority of transactions now frozen, this assumption can no longer be relied upon.

“With the length of the lockdown remaining uncertain, it is currently impossible to predict when sales agreed will complete.

“In addition, a proportion of deals already agreed are likely to involve price renegotiations or collapse.”

Other providers have indicated to EYE that they will carry on.

A spokesman for Nationwide, which has produced an index since the 1950s, said: “There are no plans to change how we issue our index at present.

“However, the index, as with any other, depends on activity in the housing market being maintained at some level.

“We could continue producing the house price index based on a fraction of the levels of approvals recorded in recent quarters.

“Activity is expected to fall sharply in the weeks ahead and we will continue to monitor developments closely.”

Halifax declined to comment but said in its index earlier this month that it continued to monitor the market and believed activity will fall, making calculating average prices more challenging.

Zoopla’s UK Cities House Price Index is also still due to be released.

Richard Donnell, research and insight director at Zoopla, said: “There has effectively been a 90% drop in sales agreed in the past month

“There is still a wide pool of data for indices to draw on such as valuations and remortgages.

“It is acceptable to incorporate that data if it is representative and used properly.”

A spokesman for Rightmove said the portal was still planning to release its asking price index.

The Land Registry said it also still plans to publish its house price data.

By MARC SHOFFMAN

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Harlow in Essex leads the way on 10-year house price growth

In the past decade Harlow in Essex has recorded the highest house price growth, CashLady analysis of Land Registry data has found.

Over the period prices have risen by 74.92% in Harlow, followed by Southend-on-Sea (74.85%), Watford (74.75%), Thurrock (73.20%) and Cambridge (73.03%).

In December 2019 prices in Harlow averaged at £290,068, up from £165,829 a decade before.

If prices continued to rise at the same rate they would reach £507,387 by 2030.

At the other end of the spectrum Aards and North Down in Northern Ireland saw prices fall by 7.73% in 10 years, followed by Aberdeen (-7.47%), Inverclyde (-5.81%) Mid and East Antrim (-5.32%) and County Durham (-5.18%).

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices and Covid-19

Most of the non-essential parts of the British economy have been put on hold by the coronavirus lockdown and the housing market – core as it may seem to many of our lives – is no exception. With moving during the lockdown period being heavily discouraged by the government (see below) and many lenders now refusing to lend to those with anything less than a 40% deposit, property website Zoopla reckons that the number of houses sold in the UK will fall by at least 60% in the next three months.

There are several factors behind the move – the shutdown has reduced banks’ capacity to process loans, surveyors are unable to value properties as easily and estate agents can’t show people around homes. On top of that, it’s hard to value a house when transactions have dried up and there are no comparable deals going through, and it’s hard to write loans when job security across almost all industries and seniority levels is suddenly in question.

So for now, the property market is effectively frozen. Price data will be virtually meaningless in the coming months, as pretty much the only deals being done right now will be between those who are forced to sell and those who are cash buyers. Agents and sellers who were hoping for a “Boris bounce” – which we did indeed seem to be getting for a short while at the start of the year – have now had their hopes dashed.

Beyond the lockdown

So what happens when the lockdown is over? A lot depends on the state of the economy – and also the level of restrictions on movement that remain. On that front, estate agents argue that there will be plenty of “pent-up demand” from both buyers and sellers, given that mortgage approvals in February hit their highest level since 2014. Samuel Tombs at Pantheon Macroeconomics also notes that cheap funding available to banks from the Bank of England should mean the mortgage market remains open and rates stay low once the worst of the crisis is past, even if the riskiest loans are no longer on offer.

But this might be wishful thinking. House prices are indeed largely dictated by the price and availability of credit (in other words, interest rates and banks’ willingness to lend). But unemployment is another huge factor and while the government has made great efforts to protect incomes and jobs and mortgage holidays are widely available (see page 32), some forced selling is almost certain. Meanwhile, a key source of demand in some areas – mini-Airbnb empires in tourist hotspots – will also suffer as holiday landlords who were burned during the lockdown sell out.

In the longer run, interest rates are unlikely to rise because the Bank of England will be forced to hold them down, given soaring government borrowing. In time that could result in inflation, which would make property appealing as a “real asset”. But that may take time – Capital Economics expects house prices to fall by just 3% this year, but notes “there are many risks that could undermine this forecast”, a larger-than-hoped rise in unemployment being the key one.

That said, if you are keen to move, then look to the shires. In relative terms at least, if there is any wider shift to working from home more regularly, you’d expect country properties to outperform city ones, while towns and villages once deemed to be on the fringes of commuting range of London and other big cities might also see a benefit.

What if I’m buying or selling a house right now?

The first point to make is that you should not move right now unless you absolutely have to. If you’re a seller, there’s no need to take your house off the market – people have lots of time on their hands to browse – but just don’t expect any viewings.

If you hope to buy but you haven’t yet exchanged, the easiest thing to do is simply to put the process on hold. You might be inclined to try to negotiate a lower price and carry on regardless (making sure the completion date is for later in the year), but bear in mind that unless the seller absolutely has to move, they will probably simply pull out. Holding off and picking up later (when the market impact will also be more visible to all involved) makes sense.

As for those whose transactions are already in motion, moves to a vacant property can go ahead (but stick to social-distancing guidelines during the removal process). However, for those moving to occupied houses, the government has advised buyers and renters that while there is no need to pull out of deals, everyone should “do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus” are behind us. This is the case even where contracts have been exchanged (and thus the transaction is legally binding).

So what does that mean? Post-exchange, failure to complete can leave both buyers or sellers (depending on who fails to move) liable to penalties, so you are basically dependent on everyone being reasonable. Mortgage lenders have said that they will extend the life of mortgage offers for up to three months, so as long as all parties can agree alternative dates, your lender shouldn’t be an issue.

If it proves impossible to delay a move, it can go ahead, but everyone must observe social-distancing measures. Note too that the lockdown will create lots of extra logistical problems. Approving paperwork and moving money may take longer due to lower levels of staffing. Physical documents are still required at various stages of property deals, so that may hold things up. And finding removal firms who are still taking on jobs right now is another challenge.

The key – as with any property transaction – is to maintain clear lines of communication, particularly if you are part of a chain, and to have a back-up plan should the deal fall through. Good luck.

By John Stepek

Source: Money Week

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UK house prices growth ‘grinding to a halt’

UK house prices rose three per cent last month just before the coronavirus outbreak hit, according to Nationwide figures released today.

But the bank warned housing market activity is “grinding to a halt” as the coronavirus lockdown stops buyers and sellers from viewing properties.

Banks have also withdrawn mortgages or made it tougher to secure mortgages, also dampening UK house prices.

Coronavirus means outlook ‘highly uncertain’

“Housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus,” Nationwide’s chief economist Robert Gardner said.

“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months.

“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.”

The UK is facing a severe economic retraction as a result of the coronavirus crisis. The government has closed all shops save supermarkets, pharmacies and banks.

And people are able to leave the house once per day to exercise, while maintaining two metres distant from others.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.,” Gardner added.

The value of British homes rose 0.8 per cent on a monthly basis in March, up from February’s 0.3 per cent change. And its three per cent annual growth rate outpaced February’s 2.3 per cent growth.

That left the average UK house price at £219,583 in March.

UK house prices growth ‘meaningless’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, called today’s UK house prices figures “academic” in light of coronavirus.

“However, they do raise expectations that when restrictions begin to ease, hopefully relatively soon and without too much damage to the economy, there is every chance that activity will pick up nearly where it left off,” he added.

“We are finding that only those industries particularly badly affected by coronavirus are having to pull out of transactions, such as those working in the travel, hospitality or entertainment industries.”

But Lucy Pendleton, founder director of independent estate agents James Pendleton, painted a darker picture. She said UK house prices were now “irrelevant” with the coronavirus outbreak. Pendleton has put more than half its estate agents on furlough, and last week house sale numbers slumped 84 per cent.

“It wasn’t so long ago that commentators talked of Brexit uncertainty putting transactions on ice but that feels like ancient history now,” she said. “Covid-19 has brought brutal new meaning to a frozen market.”

Lenders back away from mortgages

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that “lenders remain keen to lend”.

That is despite some having to pull back from high loan-to-value deals. Nationwide yesterday tightened measures on mortgage applications and no longer takes bonuses and overtime pay into account.

Nationwide also pulled its mortgage offering for low-deposit borrowers earlier this week.

Lloyds Banking Group, which owns includes Halifax and Scottish Widows and is the UK’s largest lender — has capped lending at 60 per cent of loan to value.

And Barclays has put a cap on how many mortgage applications it will accept from brokers. It has also limited high loan to value mortgages.

“In most instances this is a temporary move while they get to grips with the inability to carry out valuations, plus redirect their staff to deal with mortgage payment holiday enquiries,” Harris said.

UK house prices ‘will recover quickly’

“The only silver lining to this situation is that political uncertainty and underlying economic weakness play no part in this chaos,” Pendleton added. “The housing market will come roaring back to life as soon as the lockdown ends, aided by interest rates that are significantly lower than when it began.”

However, it is unclear how long the coronavirus lockdown will weigh on UK house prices.

“This crisis has ripped staff and customers from our hands,” Pendleton added. “Coronavirus has broken the spirits of businesses on a scale not seen since the financial crisis. It is an incredibly testing time but we must come out the other side, and come out fighting.”

By Joe Curtis

Source: City AM