Kentish Express Ashford & District
House values set to tumble amid virus pandemic
Despite government financial packages to combat coronavirus’ economic impact, it’s claimed the average home’s value will fall by an eighth by the end of the year.
Amid the pandemic, which has caused lockdowns and recessions across the globe, experts predict the average house price in the UK will fall by 13% in 2020.
The Centre for Economics and Business Research published a forecast on the “major economic shock” caused by efforts to slow the spread of Covid-19.
On average, the group has predicted a value reduction of £38,000 this year.
In the South East, house prices are expected to drop 11% which means the region will fare better than all areas except Scotland.
Another prediction is that the average UK worker could lose 35% of their income over the next four months.
It is this figure and the resulting increased dependence on savings, that the Centre (CEBR) say will affect the house price.
Particularly affected will be the private rental sector as tenants face unemployment or reduced pay, which the CEBR says will impact private homeowners’ properties.
In its report, the CEBR found: “Although the government have offered up a vast package of support, this lack of demand will mean some businesses cease to operate, many workers will lose their jobs and a lot more will face a cut in incomes.
“Housing is the single biggest expenditure item for faced by most households, which means that the shortfall in incomes has a tremendous potential to disrupt the UK’s housing markets.
“Moreover, the crisis will have different impacts on renters and those with a mortgage. The private rental sector could be particularly exposed, with 47% of private renters under the age of 35 and studies showing that those under 30 are much more likely to have already lost their job or be on reduced hours.”
But Spencer Fortag, managing director of Kent-based Dockside Property Services, said: “The Kent property market is less exposed than it was in the previous four historical property crashes in 1972, 1979, 1988 and 2008. Before each of those four crashes, there had been a significant upward spike in property values prior to the crash. We’ve not really experienced that over the last 12 months.
“The report says this house price drop will be caused by unemployment yet historically house price falls aren’t caused by high unemployment. We have furloughing now, so I don’t think it’ll be as much of an issue.”
He also noted the revival of housing markets in Chinese cities that have scaled back lockdown measures.