The COVID-19 pandemic stalled property transactions and first-time buyer mortgage applications, but now the residential property market has opened up estate agents are scrambling to deal with pent up demand.
The range of forecasts is markedly wider than usual, with a forecast price fall for 2020 of anything between 4% and 13% with considerable regional difference. Re-opening will have unlocked many of the estimated 400,000 halted transactions, but it is likely to take longer for new deals to build up in what may well be a buyer’s market. People could be affected in two ways.
The 5 April effect
The estimated number of residential property transactions in April was more than 50% down on the previous year. However, the Covid-19 pandemic was not the sole factor in play here.
From 6 April, tax reliefs for homeowners were cut back, especially letting relief, so many sellers will have made sure they completed prior to then. The introduction of a 30-day due date for paying CGT will have also favoured earlier completion.
Some homeowners will have benefited from the crisis ̶ remortgages by current homeowners looking to save money from lower interest rates have more than doubled year-on-year.
Although lenders are generally prepared to base mortgage applications on furloughed income, they require confirmation that an employee can go back to work. This means that only the reduced salary is taken into account, so higher earners subject to the £2,500 upper income limit will feel a disproportionate impact. A more expensive home may well have to wait until a return to work.
Although not wholly up to date, the UK house price index at the Land Registry has a vast amount of searchable information.