The housing market has bounced back from the lockdown freeze. But this recovery may not be sustained as unemployment rises.
Over the last few years the UK housing market has been beset by Brexit apprehension and existing affordability barriers. But in 2020, these fears have been far outweighed by the impact of Covid-19.
The unprecedented effects of the pandemic have caused the UK economy to fall into the deepest recession since records began, raising unemployment and reducing earnings among some of those who remain in their jobs.
At the peak of the outbreak, as many as 8.9 million people were on furlough, with 15% of these workers expected to lose their jobs, according to the Office for Budget Responsibility (OBR).
Despite Government intervention through the furlough and other support schemes, anxiety is mounting about the pace of economic recovery. It is likely that the most painful consequences of the pandemic may not be felt until next year.
Against this dispiriting backdrop, the housing market has outperformed expectations since its re-opening in May. And the market has become almost detached from the economic fundamentals.
The stamp duty holiday, introduced in July, has provided a significant boost. But it is unclear whether this growth is sustainable. Can the market weather the immediate challenges ahead? Or will the economic scarring inflicted by the pandemic impede growth on a long-term basis?