Do you think house prices will fall?
The latest data from the ONS showed that house prices rose 2.1% in the year to March 2020, with London recording 4.7% annual growth. Although this mainly reflects a time pre-lockdown, it does give us an indication of the state of the market beforehand. And unlike in the lead up to previous crises, recent price growth has been modest - particularly compared with the 2008 crash when prices were rising 8% on average in the two years preceding. This means we're unlikely to see the boom and bust nature witnessed in 2008.
We may see small house price falls in the near-term, but there is little evidence of this occurring at the moment as most sellers are holding firm. While households whose incomes have remained stable will be able to continue with their move, the real economic impact from the Covid-19 crisis may take a little while to feed through. If more people lose their jobs and incomes fall, we could see pressure on pricing build over the next few months. Prime areas will hold up better because higher income earners have been less affected by the crisis. Additionally, we've already seen price falls in these markets over the last few years resulting in pent-up demand.
There are still lots of unknowns, but overall we expect house prices in Great Britain to end the year similar to 2019 levels. Affordability pressures will weigh on the market, however, the relative short-nature of the coronavirus lockdown means any recovery should be quicker, although not necessarily greater, than that seen in previous crises.