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UK house sales set to plunge 60% on virus lockdown impact
UK house sales are set to plunge by 60 per cent in the next three months as the novel coronavirus outbreak batters the economy.
The slump in the second quarter, which is usually among the most active sales periods, will be followed by a further decline in the three months through September, according to a report released on Thursday from real estate portal Zoopla.
The hit to prices should feed through more slowly and will depend on the extent of the economic slowdown.
"Covid-19 presents a major new challenge," Richard Donnell, director of research and insight at Zoopla, said in an e-mailed statement.
"The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand and the number of people moving home, which we can see in our latest figures."
The partial lockdown of the country ordered by British Prime Minister Boris Johnson has restricted people's movements and closed all but essential businesses.
That has made it nearly impossible for sellers to market homes, with potential buyers unable to view properties. And the government has warned that stricter rules could be imposed if necessary.
While the logistics of the lockdown impede deals, the economic fallout from the pandemic will dictate the impact on house prices, according to Zoopla.
"The greater the economic shock and rise in unemployment, the greater the potential impact on house prices over the spring and into the summer months," according to the report.
The UK economy will contract by at least 10 per cent in the first half of the year, according to Bloomberg Economics' estimates.
Senior UK economist Dan Hanson said that support provided by the Bank of England and the Treasury should prompt a turnaround in the second half of the year if the outbreak is contained by the summer.
The virus is already weighing on deals, with the number of homes placed under offer in the seven days through March 22 down 15 per cent from the previous week, Zoopla data showed.
Prior to the outbreak, the UK housing market was off to its best start in four years, with price growth of 1.6 per cent in February, up from 1.2 per cent a year earlier, according to Zoopla's UK cities index. BLOOMBERG