Good news: Housing market damage may be ‘much less’ than expected

Estate Agent Today reports that the Nationwide says government measures mean the impact of Coronavirus on the housing market may be much less damaging than many may expect.

However, the building society is warning that house price movements may be difficult to calculate in the next months because of the temporary near-halt to transactions.

Zah Azeem, Partner, Scrivener Tibbatts says: “The Nationwide is usually on the money when it comes to analysis of the residential property market. Wimbledon as one of London’s most sought after locations is also fairly resilient.”

Robert Gardner, Nationwide’s chief economist, says: “A lack of transactions will make gauging house price trends difficult in the coming months. The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus. But the raft of policies adopted to support the economy, including to protect businesses and jobs, to support peoples’ incomes and keep borrowing costs down, should set the stage for a strong rebound once the shock passes, and help limit long-term damage to the economy.

“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”

The March index from the society – clearly reflecting the market prior to the lockdown – shows that Wales was the strongest performing national region in the first quarter of 2020, with annual price growth picking up to 6.45%. 

Following several quarters of little or no growth, England saw annual house price growth increase to 1.9%.

Conditions remained subdued in Scotland and Northern Ireland, which saw annual price growth of 0.8 per cent and 0.7 per cent respectively.