The Effect Corona Virus Has on The UK Housing Market - Nova
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Over the past few weeks Coronavirus has been having a bigger and bigger impact on our lives. Empty store shelves, working from home, avoiding dense public places, it is without doubt that COVID-19 is becoming more serious than many might have imagined. However, besides Corona virus impacting our daily lives it has also had a significant effect on the economic markets.

Last week the stock market took its biggest hit since the 2008 financial crisis. The FTSE 100 index was down more than 6% by the afternoon, losing more than £100 billion and falling around 6,000 points. Because of this uncertainty a large proportion of individual investors started selling their shares out of fear. Consequently, the impact COVID-19 has had on the stock market is larger than expected, but what is the effect on the property market?

The biggest impact COVID-19 has had on the housing market so far is on enquires. International investors are less interested in making the journey to central London to do viewings. However, the UK housing market has showed that it is mostly resilient to the major impacts COVID-19 has had on the economy.

What is becoming clear, is that despite the impacts Coronavirus has had there has been little impact on the confidence of consumers in the housing market. Homeowners neither have the inclination or ability to sell their property straight away, as investors in other financial instruments are able to do. The same goes for people with new mortgages. In January alone more than 70,000 people applied for new mortgages, the highest since 2016. Given the length of time that investors are in the property market for, and the size of their goals, it is not likely for these investors to put a stop on their investment’s plans.

This effect is compounded since the housing market has not been affected nearly as much as the stock market and seems resilient to the panic experienced in other markets.

If we go back in time and look at previous outbreaks, what can be concluded is that once the issue is resolved the markets recover quite fast. During past outbreaks such as H1N1 (swine flu) even though it had great impact on the economy, less mortgage approvals, and reduced construction activities, the housing market in London still experienced a 10.1% growth from March 2009- March 2010.

When looking at short-term-lets, COVID-19 is likely to have a major, short term impact. Coming into Spring this is the time of the year when most short stay holidays start to increase, and bookings pick up. However, Coronavirus has brought up a lot of uncertainty for these customers. There is a lot of conflicting information from news articles on what will be done in order to stop the spreading, leading to a reduction in travel. This has led to many cancellations, and a lack of new bookings. However, once COVID-19 has been resolved it is expected to recover rather quickly, and if the property is in a good location and is desirable to homeowners the value of the underlying asset is very unlikely to fall.

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