Lockdown may have caused a downturn, but the future is still bright for the property market

Figures released by HMRC in May confirmed that the COVID-19 Lockdown period had resulted in a massive fall in activity in both the residential and non-residential property markets. Residential transactions fell by 53.4% compared with April 2019, and non-residential was not far behind at 45.2%. this was in fact much better than some had predicted at 80% so may be cause for come guarded optimism.

While such a dip is understandable and even to be expected in the current climate, it will still come as stark news to a market which is already reeling from the impact of restrictions that have seen surveyors unable to attend properties for valuations, buyers unable to view properties and mortgage lender capacity massively reduced by work from home practices.

On the other hand, there is an argument that the deeper the dip now, the greater the ‘bounce back’ effect on the market will be once the restrictions are lifted. People will be more likely than ever to feel an urge to move from homes in which they’ve been stuck for months. People living in expensive cities may look to move further afield to cheaper areas after a period of remote working. Investors will look to take advantage of a market likely to be priced more competitively in an effort to get things moving.

David Hannah, Founder and Principal Consultant of Cornerstone Tax believes that the housing market will expect a ‘bounce back’ that will be faster than expected, commenting;

“Brexit uncertainty has also been a long term distraction on the market which is likely to seem less relevant in the aftermath of COVID-19. With all countries in Europe equally affected by the virus and its likely aftermath on their own economies, it seems likely that the British public will be less concerned with whatever may or may not happen in negotiations in Brussels, and more concerned with living life as close to normally as possible once restrictions are lifted.

The figures to emerge from HMRC are concerning, not least because of its implications for various professionals and their levels of business. But it also possibly heralds the very nadir of the impact of Coronavirus on the UK property market and indicates a quicker than expected resurgence in the months to come.”