After lockdown: the future for the housing market

J Finance housing market after lockdown

Lockdown and social distancing brought the property market to a standstill, but as the rules relaxed, and we started to get back to a ‘new normal’, the market appeared to have bounced back…

What does the future of the UK housing market hold?

According to data from Rightmove on 13 May 2020, the day that estate agents were allowed to reopen after lockdown, visits to the Rightmove website rose to more than 5.2 million, showing a massive interest in moving home.

Two months on, and opinions on the state of the housing market seem divided. According to property valuation site Zoopla, house prices have returned to pre-lockdown levels, while the Nationwide Building Society claims it has seen the biggest monthly drop in house values since 2009.

So, can the impetus seen in May be maintained, or will the threat of recession set the housing market back? The divided opinion of those in the industry shows that it is not going to be easy to work out what will happen next – after all, none of us have a crystal ball to look into! But looking at what happened in the past few decades can be a learning experience.

Market commentators such as Miles Shipside from Rightmove have said that it is particularly difficult to predict what house prices will do as the nature of the current crisis is so very different to previous downturns that we have experienced.

2008 Crash

In 2008, the US financial markets were hit by the subprime mortgage crisis.

In a ripple effect that started across the Atlantic, the London Stock Market crashed because lenders had relaxed their previously strict lending criteria, with low interest rates and low deposit requirements tempting people who would otherwise not have been able to afford to buy a property. This drove up housing prices. However, in reality it meant that too many people had taken out loans that they could not afford if the interest rates increased. As the recession hit, house prices dropped, wages stagnated and there were more repossessions. It took around six years for house prices to regain their pre-crash levels. This was followed by a period of sustained growth in house prices.

The effects of the 2008 crash are still apparent today – the government introduced schemes such as Help to Buy to help first-time buyers, as hefty deposit requirements make it harder for millennials to get on the housing ladder.

1990’s Crash

In the early 90s, two factors caused the crash in the market. First, there was a false inflation in house prices, as buyers raced to purchase properties before the abolition of multiple mortgage relief. This was followed soon after by spiralling interest rates, which rose as high as 14% in the two years between 1989 and 1991. This led to repossessions, a crash in property values and many homeowners stuck in negative equity for more than six years afterwards. Again, this period was followed by a very healthy rise in property values.

2020 Pandemic

Fast forward to 2020 and the situation is very different. For a start, the market has already been slowed down by the uncertainty of Brexit, with many people keen to move but reluctant to do so amid political and financial uncertainty. In December 2019 the decisive victory of the Tories in the general election led homeowners to feel confident that Bexit would be resolved and the first quarter of 2020 saw a very buoyant house market, which was cut down by the COVID-19 lockdown.

The Future

So, what does the future hold for the housing market?

The latest data has revealed that the price of homes coming to the market has increased by 1.9% compared to pre-lockdown as the property sector bounces back to life.

According to Rightmove, the average asking price is now £337,884, due to pent-up demand, with the number of sales agreed down by only 3% compared to the same period last year.

Furthermore, as the Government is still injecting huge amounts of cash to ensure people‘s jobs and income are protected, most people are in a far better place financially than they might otherwise have been.

And according to a survey by the Royal Institute of Chartered Surveys (Rics), demand has shot up for homes with outside space.

Although there are several scenarios for the economy following the period of lockdown, many economists are predicting a ‘V’ shaped sharp downturn with a swift bounce back down.

As we said earlier, without a crystal ball, it is impossible to see exactly what will happen in the next few months, but we remain positive. If you are looking to move, or buy your first home, talking to an independent mortgage advisor is a wise first move.

If you would like to discuss income protection insurance, or any changes to your financial situation during the COVID-19 pandemic, we will be happy to help. Please contact us without obligation.

Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email