How Coronavirus is Affecting the Real Estate Industry in the UK

Coronavirus

It has been a couple of months since we all have been battling against coronavirus (COVID 19).
The government, based on the suggestions and knowledge of health experts, has put the country
on lockdown. Though social distancing is the only way to contain the virus, it is decimating the
economy rapidly.

COVID 19 has clobbered the real estate industry, and it seems to get worse before it gets better.
After hotels, restaurants, bars and entertainment sector, the worst-hit the real estate sector has
faced so far.

Construction work is at a halt because the supplies that builders and developers need are being
interrupted. More workers are at home due to quarantines, shutdowns, and lockdowns.
Experts say that it is too early to detect the impact of the pandemic on the real estate industry. It
depends on the severity and duration of the outbreak. Social distancing has become one of the
causes of drop-down in the growth of real estate. Sellers are concerned about buyers visiting
their homes and buyers are worried about visiting sellers’ homes. Here is the implication of
COVID 19 on real estate.

Fall in transactions

There is no denying that COVID 19 has affected every sector of the economy, and nobody knows
how long its impact will continue. Seeing the current scenario, nobody knows whether this will
affect house prices or not. The future of virus spread is uncertain, and uncertainty is never good
for any industry.

To date, the housing prices have not fallen and do not seem to fall short. The significant impact
due to COVID-19 the market has observed is a fall in transactions. Buying and selling have been
challenging to do on a practical level.

Curfews, shutdowns and social distancing are the prominent causes of a sudden drop in buying
and selling of houses. COVID-19 has affected the transaction, but there is no fall in the housing
prices.

Short-term reduction in house prices may be observed, but it is expected to be ephemeral. Fewer
properties will be available for sale due to self-isolating. Some of the sellers have still listed their
properties and allowing borrowers to visit the site by requiring borrowers to wash their hands
with soap and sanitizers.

However, there is not much demand for property. Fewer buyers are viewing and biding because
more and more people are staying put. If the COVID 19 continues to spread like this, there are
chances that the housing prices will go down, but the industry cannot say anything about it
because of the uncertainty.

Only keen buyers and sellers are part of it

There have been cities in the UK like Yorkshire that have been facing house price gains for a
couple of years. Part of the reason for soaring prices is the sheer expensiveness of the capital.
Houses in such cities are so expensive that not everyone can afford, but the spread of the
pandemic has interfered with the fast pace of the housing market.

As people do not want to come into contact with each other, overall transactions have got
reduced drastically. Apart from social distancing, the other reason for not investing in property
is business is shut, which means no cash inflows. As people have to rely on savings to meet their
basic needs, they cannot afford to block money in a house.

The full impact of COVID 19 on the real estate industry is not yet understood, but anyone can
interpret that more and more people have backed away from buying properties. Only very
motivated buyers and sellers are coming ahead to operate even in such an unknown
environment and these are those buyers who do not have to face problems with taking out a
mortgage due to their bad credit score.

Mortgage brokers are an integral part of the housing industry. A survey revealed that bad credit
mortgage brokers in the UK had faced a fall in the number of people taking out a mortgage.
However, it can be cheap to take out a mortgage this time because the Bank of England has
reduced the base rate. Even current borrowers would be paying smaller monthly repayments.
A sudden decline in the demand for bad credit mortgages is people are not looking to invest in
houses. How long this situation will continue to exist, nobody knows.

Capital appreciation

Property investment is much less volatile than the stock market because the prices continue to
rise if you buy in a well-chosen location. There can be a short-term fall in prices due to economic
and financial changes, however. Such fluctuations are at the granular level, and hence it does
not affect the buying and selling of the houses at a grand scale.

Since the housing prices are not going to fall, sellers will not face losses if they trade in a
property. However, this scenario varies from locality to locality. There are some areas where you
cannot expect capital appreciation down the road – at least unless the spread of the pandemic is
under control.

The market is weaker in some of the areas, and their buyers are in a favorable position
provided they have secured jobs. COVID 19 has thrown out the buyers who are unable to buy
houses due to a reduced level of income.

Rental yields

Since the transactions have lost the momentum, the demand for rental properties will continue
to rise. Buy-to-let investors should consider the market before investing. The government has
announced some measures to protect the rental market. Landlords are not allowed to evict

tenants. Landlords can also give a break in payments, and the same way landlords with buy-to-
let mortgages can apply for a mortgage payment holiday.

COVID-19 has greatly affected each sector of the economy, and real estate is no exception. So far,
the transactions have reduced, but there is no fall in the housing prices. Experts are saying
whether the prices will stay stable at the current level or fall in the future, it depends on the
severity of the pandemic.

Description: Needless to mention that the virus is affecting the real estate market. The buying
and selling transactions have plummeted drastically.

Sebastian

Sebastian was born and raised in the busy city of Abbottabad. As a journalist, Saad Mushtaq has contributed to many online publications including the PAK Today and the Huffing Post. In regards to academics, Saad Mushtaq earned a degree in business from the Abbottabad UST, Havelian. Saad Mushtaq follows the money and covers all aspects of emerging tech here at The Hear Up.Thanks