Although the UK housing market is certainly being impacted by the lockdown restrictions imposed during the Covid-19 pandemic, it is continuing to prove its resilience. London estate agent Knight Frank have proposed a five-point plan to further boost the market and ensure it quickly returns to normal once the coronavirus situation is over. How will this affect the property investments market?
According to Knight Frank’s head of London sales, James Clarke, despite the number of transactions understandably falling during the lockdown, buyers are taking a “pragmatic approach” to the situation. The drop in transactions therefore is unlikely to continue into the second half of 2020.
Knight Frank predict a full recovery in sales volumes by the end of 2020, with residential transactions surpassing 2019 levels. The uplift will begin slowly in June, following sharp drops in April and May.
In terms of house prices, Knight Frank’s 2020 Residential Market Outlook report states that “once the current crisis passes and activity begins to resume, we have to expect that weaker economic activity in the first half of 2020, the dislocation in the jobs market and weakened consumer sentiment will impact on prices.”
This will lead to an average drop in housing prices across the country of 3%. However, this decrease in property prices will be time-limited, with a sharp expected recovery in 2021.
Knight Frank’s predictions are based on the assumption that the covid-19 lockdown restrictions will be gradually lifted through June.
They are also urging the government do more to support the UK housing market and return it to its strong growth as quickly as possible. Knight Frank have recently released a five-point stimulus package to help boost the property market.
- Stamp duty holiday: Such a tax break would encourage people to move in the housing market. This proposal has already been touted by other industry bodies, including the Royal Institute for Chartered Surveyors (RICS).
- Extend Help-to-Buy: By extending this popular scheme, the UK could see a growth in transaction volumes. There are already rumours that such an extension could happen.
- Review the conveyancing process: The conveyancing process heavily relies in paperwork and there have long been calls to bring it into the 21st century. This would make the entire process much more efficient; a top priority at times like these.
- Introduce virtual planning meetings: According to Knight Frank, the Coronavirus Bill allows councils to hold virtual planning meetings. These should be introduced to keep things moving during lockdown. Alongside this there should be other improvements, such as increasing the timeframe for planning permission.
- Greater flexibility and planning obligations: The government should encourage offering staggered or staged payments in this area. This would help ease any cashflow issues, thereby keeping the market moving.
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