The impact of Corona Virus on the short term property market

Paul Davies, director of @Home Estates and About Mortgages gives us an insight into the Local Property Market in light of the Corona Virus.

There have been some unbelievable and very much unexpected developments in the property market at the time of writing this piece. To meet deadline, some of the information is happening as I write….

The threat of corona virus, at this point either real or perceived, is likely to be decided by the time this publication reaches you and this has had a dramatic effect in our viewing activity.

Following the busiest start to the year in a long time, the phones have just stopped. It was sudden and noticeable. It seems a lot of people are avoiding unnecessary meetings and journeys, judging by the lack of traffic on the short drive to work.

However, this was quickly followed by a 0.5% drop in interest rates by the Bank of England. If lenders follow suit, this could be positive for the property market. I’m certainly no expert on contagious diseases, but the indications are that corona virus is a short, sharp shock that can spread rapidly, but then tail off quickly too. So this will have short term effect on activity for sure.

Once we’re through the worst of it, with the China experience suggesting this will be reasonably quickly, then we have lower borrowing costs making it a positive balance for the property market. A £200,000 mortgage will be £1000 per year cheaper, thus making property more affordable, and with Brexit on the horizon, there will be little appetite to increase this rate in the near term.

The impact on the property market will be negative but short lived and the rate change supports my view that the medium term prospects for the housing markets are positive.

We are very hopeful that corona virus passes quickly and that the media hype is just that, and that your health and loved ones aren’t affected.