Tragic Tale of The British Housing Market Amidst The Coronavirus Pandemic

Amongst all the impacted sectors, the housing market is perhaps one of the most affected by the coronavirus pandemic. The lockdown has not only brought a steep decline in buyers but has also led the construction activity in the entire sector to come to a standstill. The country which had just come out of the shadows of Brexit, had been showing early signs of economic revival when the pandemic arrived and staggered market expectations.

The housing sector had been working with a mission set out by the government to provide thousands of affordable housing within a certain timeframe but it now eyes those tentative dates to be pushed back. Moreover, the state of employment and the state of business activity in the country is such that most of the people are not having an optimistic outlook for the economy at least for this year and the next year.

British mortgage lender Halifax recently stated that the price of houses in the country have fallen by 0.6 per cent in April compared to the previous month, though it showed a rise of 2.7 per cent on annual terms. The lender, however, cautioned that the actual rise or fall in prices is difficult to measure on account of just few transactions taking place in the past one and half months. Despite the overall downturn, the lender has expressed his confidence that the long term health of the housing market is intact, and it will bounce back once the situation starts improving.

Only a couple of day back, several London-based brokers stated that they had been flooded with enquiries from people who wanted to move out of London to less crowded countryside places for the fear of the virus infection. The enquiries though on the surface seems to be spurring on account of the coronavirus, digging a little deep it reveals the general publics gloomy outlook about their livelihoods in the near to medium term future. The number of unemployed people in the country is at a record high and many more are still expected to register for unemployment benefits in the coming day. The Office of Budget responsibility, The Office of National Statistics and even the Bank of England have stated that the economy is set for a long term recession. But the situation is not as bad in the whole country as in prime urban locations like London. The pandemic which has impacted the crowded urban centres the most has accentuated the risk of living in crowded place and has prompted people to seek a safer and healthier lifestyle outside of the cities. It thus seems obvious that if a sizable number of people would want to leave cities, the prices of house would fall.

The reports that have come out in the past few days have not specifically talked about the commercial real estate prices in London or other major urban centres. It seems that London has been able to keep it importance intact as a major financial and trading destination of the world. However, in the case of residential housing the price fluctuation in prices of London properties is more violent than the rest of the country. The extremely expensive London properties are also one of the reasons that people are now wanting to move out of the city. Given what the business scenario seems in the future, it is highly unlikely that employment situation would improve in the city. In this regard, the market expects the house prices to fall further in the city. Factors, aiding the decision making of Londoners to sell off their properties at current prices, could also be the work from home facilities that has been promoted in large in the past couple of months to sustain business activity levels while the lockdown is in place across the nation. Due to this facility, many people could be starting to realize that it is better to live in a spacious semi-urban place where the quality of life would be relatively better while maintaining the same productivity levels and income flows.

The government-imposed social distancing measures and safety protocols being recommended for the prevention of the coronavirus infection had witnessed far more difficulty to put into practice in a city like London. It is highly likely that people would be more uncomfortable to go to their places of work and earn their livelihood in such a setting than in a semi urban setting. In a semi urban setting, everyday life is expected be closer to normal and people would be lot safer as those places are less crowded. Moreover, places like London are melting pots of different cultures, people from all over the world come here on a regular basis. Given the way the situation has developed since the beginning of March this year, it is more likely that if the government decides to open up the economy, the second wave of pandemic, if any, would be first recorded in London. However, it could happen that in the coming months a lot of this fear psychosis is subsided and things would get back to normal.