The housing market has reopened, but “most ingredients are in place for a property crash”, writes Larry Elliott in The Guardian. Ultra-low interest rates and mortgage holidays should cushion some of the pain. Yet unemployment sits at 2.1 million. That is only a hint of the misery to come as the Treasury winds down its job-furlough scheme, which supports eight million people.
The Bank of England is predicting a 16% slump in prices, says Kate Andrews in The Spectator. Yet other analysts think that falling demand and supply will cancel each other out.
The bigger question is how the changes will shake-out geographically: Londoners have found themselves confined to their small, expensive flats during lockdown. A more durable shift to working from home could prompt an exodus to the provinces. Lockdowns have made London a less fun place to live, agrees The Economist. One investor says closed theatres and restaurants risk turning the capital into a pricier version of Frankfurt, but “with more congestion”.
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Keep an eye on property auctions for a sign of things to come, says Melissa Lawford in The Daily Telegraph. Sales continued online during lockdown: this is an unsentimental market where most buyers are investors and the properties are normally vacant.
Prices have been holding up although more listings than usual are being withdrawn. The worry is that a wave of forced sellers could yet drive down prices. The furlough scheme only ends in October, so we may have to wait until then to see what toll the virus eventually takes on property.
In the US, transactions are down, but that is partly thanks to a big drop in houses for sale: all but the most desperate are keeping their houses off the market. The result is that US prices have actually “marginally” advanced.
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