Can the UK housing market escape a slump?

The Bank of England is predicting a 16% slump in house prices.

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”. 

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Prices have been holding up although more listings than usual are being withdrawn.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.

Recommended

Will the government’s green plans hit the price of your home?
House prices

Will the government’s green plans hit the price of your home?

UK house prices are still rising fast. But the government’s plan to reach net-zero carbon emissions could halt that – for some of us, at least. John S…
21 Oct 2021
If you want to get exposure to bitcoin, I have this great idea for you
Bitcoin & crypto

If you want to get exposure to bitcoin, I have this great idea for you

As bitcoin climbs to new highs, you can now buy a bitcoin ETF. But if you really want to get some exposure to bitcoin, there’s a much better way, says…
20 Oct 2021
Too embarrassed to ask: what is a dividend yield?
Too embarrassed to ask

Too embarrassed to ask: what is a dividend yield?

Learn what a dividend yield is and what it can tell investors about a company in MoneyWeek's latest “too embarrassed to ask” video.
19 Oct 2021
Index tracker funds won't shield your wealth from inflation – here's why
Investment strategy

Index tracker funds won't shield your wealth from inflation – here's why

If you want your portfolio to survive in an inflationary world, a broad index-tracker fund won’t cut it. You need to be a lot more selective than that…
19 Oct 2021

Most Popular

How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021
Why the world’s most important economic data release has unnerved markets
US Economy

Why the world’s most important economic data release has unnerved markets

The US added only 194,000 jobs in September, far shorter than the 500,000 that were expected. John Stepek explains why markets didn't react as they no…
11 Oct 2021