Housing Market Set For Short Sharp Contraction
UK housing transactions could fall short of projections by between 38 and 53 per cent in 2020, according to recent speculative data.
According to economic projections, Savills has predicted a ‘short sharp shock’ in UK housing transactions as a result of frozen activity caused by government interventions introduced to slow the spread of Covid-19.
The research uses the Chinese property market to project the impact on domestic transactions. Chinese residential transactions were at zero for the opening three weeks of movement restrictions with activity returning to within 50 per cent of the four year average in the two months following social distancing and lockdown measures.
For 2020, a fall of between 20 and 40 per cent, of the UK’s five year average, by June, with levels remaining broadly consistent until September, would see transaction levels fall to just over half a million (566,000).
At best, the projections suggest total activity in 2020 could reach 745,000 transactions; a long way short of the 1,207,000 housing transaction estimate for 2020.
Estimating that transaction levels will be between 60 and 80 per cent of the five year average by January 2021, with average activity resuming by May 2021, Savills predict that transaction levels could reach 1,122,000 and 1,166,000 by the end of next year.
However bleak the projections look, Savills are clear to state that government support and interventions could reduce the economic impact and ensure that recovery will be ‘swift’.
Lucian Cook, director of residential research for Savills, said:
“The UK Government has responded with extensive support for the economy and businesses, including liquidity injections, grants and low-cost loans for the most exposed sectors of the economy and encouraging lenders to take a benevolent approach to those struggling with mortgage payments.
“This should help reduce some of the pandemic’s impact, enable a swift economic recovery and limit the number of households forced to sell.”
If activity can start to recover by June, do you feel the impact of Covid-19 will be temporary?