Impact of Coronavirus on the London Property Market

After years of Brexit uncertainty, the market exploded with activity after the election, only to be struck by Coronavirus. According to the NAEA, the number of property viewings tumbled by more than 50% in the last two weeks. Sellers are closing their doors, reluctant to let potential buyers in. One London agent states that 17% and rising, of sales, have fallen through. It seems too soon to tell what the effect on values will be. 

The government is introducing new measures on a daily basis trying to control the upward surge of cases. The stock market is taking a battering whilst businesses old and new need this like a hole in the head.

Schools are closing, people are working remotely and it’s a matter of time before we follow other countries and lockdown. 

Professor Yolanda Barnes of UCL’s Bartlett Real Estate Institute predicts “The demand for homes will probably fall and house-builders will probably cut their output in response”.

The Sentiment is weak despite efforts to mitigate by the Bank of England’s rate cut, the Chancellors ￡30 billion-plus injection into the economy and legislation to get landlords and mortgage companies to allow three-month arrears in payment. 

Is there a silver lining to this? Lucian Cook of Savills Research states that “All this points to a hiatus in the housing market, without necessarily affecting longer-term prospects” and points out that Savills stand by their five-year forecast. 

Mortgage debt will remain cheap for longer, whilst prime London properties might present better value, especially for dollar buyers. When Coronavirus begins to disappear, potential investors might recognise good value and after suffering heavy losses on the stock market, will feel confident investing in a more solid asset class. This pattern of investor behaviour was evident after SARS and Swine Flu, when investors weighed back into property as a safe place to park their wealth and realise sure and slow growth.

How would the Coronavirus impact on the market in the longer term? Yolanda Barnes thinks that certainly there will be “an acceleration of trends which are already in train” one of which is working from home. As more self-isolate, people might appreciate that home working improves productivity, levels out the work/life balance and reduces the need to live near their place of work. Would people think more carefully about living in highly dense and contagious cities and opt for greener spaces? 

We are living in extraordinary times and as Churchill said during WWII we must Keep Buggering On. 

Keep safe and sane, especially to those isolating and to parents who have turned into teachers overnight and homeschooling for the weeks to come.

Jazmin Atkins, 20 March 2020