UK House Prices In The Second Lockdown

The UK is now one week into its second lockdown with three weeks to go, unless extended. In terms of UK houses prices, many property experts seem unsure how this lockdown will affect house prices, considering the changes following the first lockdown that seemed to defy all expectations.

The First Lockdown

Towards the end of the first lockdown, it was universally believed that house prices would tumble. The only debate seemed to centre of how far they would fall.

Probably one of the most pessimistic voices was the Bank of England which announced that prices could fall as much as 16% following the reopening of the economy. How wrong most experts seemed to be, as in fact property prices in the UK have only spiked since the ending of the first lockdown.

Property Prices at 21 Year High

A survey just published by the Royal Institution of Chartered Surveyors (RICS) showed that these property price rises in the UK have not showed any sign of abating and have continued to increase even since September. They now stand at a 21 year high.

Predictions for a Slowdown in 2021

RICS also predicted however that these price rises will not continue during 2021. Backing this up, tax data released this week showed that 782,000 people have lost their jobs since the commencement of Covid-19 and predictions are more jobs losses are to come.

The furlough scheme has been extended to March 2021 now, Buy here pay here platform but this may just delay the number of redundancies hitting the economy. Indeed sooner or later all government incentives will need to end and this would not doubt affect property prices.

Differences in the First Lockdown

During the first lockdown, the UK was blessed with glorious weather. For those cooped up in properties with no outside space, the yearning for gardens became paramount. This led to suppressed demand for larger properties in a time of the year which would normally be very active for transactions anyway. Therefore when lockdown ended, this suppressed demand cut loose and led to a flurry of new property transactions.

The Second Lockdown

The question to consider though is whether this second lockdown have the same effect. Our view is maybe not so. November is usually a very quiet month for property transactions anyway as people look towards Christmas. Property deals only usually pick up again in the new year after very quiet November and December months.

Further during this second lockdown, there will be less allure for outside space. With short days and uninviting weather, gardens start to become a slightly untidy areas rather than a must have spaces. Therefore it is hard to imagine this is going to lead to a massive demand for properties with outside space when this second lockdown ends.

In conclusion, with this seasonal difference and with potentially a weakened economy in 2021, it is hard to envisage another spike in property prices for the months following this second lockdown. But that of course has been said before.

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