Real estate market 'will bounce back'

Experts say slowdown of property sales caused by virus will be short term

The United Kingdom housing market will bounce back after the lockdown ends and COVID-19 cases drop, according to real estate experts.

The industry had started to recover after years of Brexit uncertainty following Boris Johnson's election win in December, but the outbreak of the novel coronavirus and the UK going into lockdown put uncertainty into the market again.

According to property platform, Rightmove, the average asking price in April fell 0.2 percent, to 311,950 pounds ($388,441). Last April saw an increase of 2.1 percent.

Despite the gloomy outlook in the short term, real estate companies are positive about the future and believe the sector will make a swift recovery.

Marc von Grundherr, director of London-based Benham and Reeves, said people are cautious about purchasing property at the moment, but he believes it will be short-lived.

"People need homes," he said. "So, I'm still very positive … everything will be back to normal very quickly."

Von Grundherr said the economy will take a hit because of the virus, but he does not believe the property market will "fall off a cliff".

Government actions to help support jobs and businesses, banks willing to lend money, and low interest rates mean homes are more affordable, unlike in the 2008 financial crisis, and London still remains an attractive city for overseas buyers, he said.

"None of the fundamentals for London have changed," he said. "You have still got all of the key UK factors of why people buy and why people invest money. It has good business, finance, technology, and education is key."

The demand for rental properties fell by more than 55 percent in the last three weeks of March, Von Grundherr said, and the market for sales saw a 70 percent decline in buyer numbers.

However, interest in property has started to recover in recent weeks and many real estate companies have started showing property remotely during the lockdown by offering virtual tours of properties.

"We had a 30 percent increase in the number of enquiries, people are coming back," he said, while adding that many homeowners have begun researching future moves.

Looking ahead, Von Grundherr said: "Over the next five years, I think we're going to see anywhere from 13 to 20 percent growth of London sales prices… and there will be a 15 percent growth in rents."

He also hopes there will be an extension of the Help to Buy program, which makes homes more affordable for first-time buyers.

Miles Shipside, a Rightmove director and housing market analyst, believes it will take "several months or more" before the market finds its feet.

"During this slow-motion period, we do not expect significant price falls, as home sellers will not be prepared to cut their prices while it is still not clear how the general public, businesses, financial markets, and the government are going to handle the transition to whatever turns out to be the new normal," Shipside said.