Do you think Covid-19 will cause a crash in the housing market?

[Toddlertown]

We were viewing properties to buy (first time buyers) prior to this out break. Obviously this is now on hold. There are a few articles I have seen suggesting house prices are going to fall drastically due to a recession after all this is over. Do you think that’s true? Should we hold off?

I’ve been wondering about this. We put our house on the market about a week before lockdown as we found a house we wanted to buy. What happens now. After all of this settles do we continue? Will rates go sky high and mean we can’t afford the new higher mortgage?

Thread number 1000 on this.
Short term maybe but the demand will be pent up for these months and then market will be on the move again. People always have to move for many reasons. I don't see a huge drop at all. I just got a buy to let mortgage this week no worries from lender.

No, it's just on hold for a while. I've restrictions are lifted there will be an influx of sellers and buyers.

@stefascope I thought we just had an interest rate cut?

Worse than 2008 some are expecting. There was a house where I live on a well sought after road, valued for £247,000, 6 bedrooms. 2008 came along with the recession they sold it for £68,000. Fast forward to 2019 and it's worth neary £1,000,000! Worth waiting I'd say.

Yes. We are trying to sell a house but viewings are banned,

I don't want to sound as unjustifiably self-assured as some posters on here, nor do I want to insult, but seriously, why would you think this is all going to be resolved in a few months? The world economy has ground to a halt. People are going to pay. Rishi has said as much. And to @NewJez who thinks governments' throwing money at this somehow solves the problem... where did they get the hundreds of billions out of thin air? Who is going to pay for it? We are absolutely going into recession, and as one of the first commenters said it's certainly a depression. There's no two ways about it. You don't pause the global economy for 6 months and expect a shitty overpriced, loaned house to hold its value. They're the first to go.

I think so. I think people would be scared to take on a mortgage if they thought they or their partner could very well die in the next few months.

why would you think this is all going to be resolved in a few months?

Landlords & property developers are probably hoping it is so lots of them will say the market is still strong.

Agree with Higher it was interesting to hear from an economist say the same as this is an unnatural suppression of demand rather than no demand.

I think definitely yes. 'Crash' is dramatic but they will go down there is no doubt.

Baffled by the 'not a real recession' comment. People will not have jobs to go back to after this so there will be less money to spend. That is a real recession. Plus until there is a vaccine life is unlikely to totally go back to normal. This is an economic shock, so will cause a recession.

OP if you are still ok work-wise the best thing you can do is take the opportunity of having nothing to spend money on to save some more and look later in the year if things settle down a bit by then.

Depends on different factors. I personally think it might raise as alot of people on full pay working from home not spending money want a bigger house or to buy a house. Then it could go down if alot of people die and empty properies. Depends how many people effected by lose of income. This isnt a true recession. People want to spend but being forced not too. Only Christal ball tell you answer here

One other thing there may be some who are in a tight situation who have to sell quickly at a lower price.

Do you think there might be some serious inflation coming?

The housing market will be massively disrupted - not just sales of existing houses, but building new ones. Suppliers could go bust, small and medium house builders could go the same way, planning could be thrown into chaos as councils concentrate on higher priorities.

Nope. It hasnt impacted on the supply and demand issue that has faced this country for decades... Its basically on pause... Now if lots of people die and there are therefore empty homes to sell maybe an effect locally but that'll be it.

This. Even through the subprime mortgages saga there was no crash. I'll admit I have wanted this in the past as I did not have enough money for a deposit. It will not happen especially in sort after locations.

Thing is though wont this "episode" teach people the importance of saving as this is unlikely to be the only pandemic we will face? I know I will save more & store toilet roll! Lots of retailers never recovered from the 2008 crash & people switched to spending money on experiences eg travel, eating out. The things massively impacted by a pandemic.

Impossible to say. I agree with whoever said it’s likely just ‘on pause’
It’ll depend on how quickly we can bounce back. Absolute best case scenario, everyone follows the social distancing rules and we are as efficient as South Korea at getting the virus under check, life returns to normal and only a small fraction of people are affected financially (furlough carries most through and they return back to work) we may not see it as bad as some people think.
Where I work (without giving away too many details) some of our clients include the UKs largest car manufacturers. Most of them believe that when lockdown is over and summer is here, people will be happily out and spending money. They’re preparing for a huge increase in sales come summer. They can’t be thinking that for nothing.

But I am trying to be optimistic!

I don’t think this is the most likely option, but the government huge borrowing and possible decision for BoE to print more money, may lead to hyperinflation if this continues more than 3 months.

Hyperinflation could lead to huge increase in housing costs, rather than the reverse?

Andrew Marr has just said that we're heading for recession and Michael Gove didn't disagree with him. If that's the case, yes house prices will reduce dramatically. My reckoning is by 20% minimum.

I’m so concerned about this. DH and I currently saving with plan to buy next year, but we’ll need a roughly 95% mortgage despite a good joint salary as we’re in an expensive area. Some drop in prices might benefit us, but a loss of 5% deposit mortgages won’t and nor will lots of nervous people in negative equity who don’t want to sell their homes. I think it unlikely a price drop that would make our money stretch to a 10% deposit wouldn’t be accompanied by the second two issues

It hasnt impacted on the supply and demand issue that has faced this country for decades...

Yes it has, if there is a recession and people have less money it directly impacts on demand.

@Ethelfleda we all hope you are right. Unfortunately I don't think lockdown is a magic wand and there are going to be restrictions for quite a long time of one type or another.

BovvyDazz, why do you think the UK didn't have hyper inflation from 2008?

Yes. People are losing their jobs. You can't pay for a house if you don't have money.

Also, new taxes will be introduced to pay for all this. Houses can't be moved out of the country easily, so they will be easy to tax and if you have made huge unearned, untaxed gains, you will not really have lost anything if you have to pay more tax. But taxes will put downward pressure on house prices for the foreseeable future.