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House prices set to fall as virus sends purchases plunging

City AM logo City AM 26/03/2020 Harry Robertson
Rowhouses in the district of Stratford, in the East End of London, Borough of Newham. London, UK © Busà Photography Rowhouses in the district of Stratford, in the East End of London, Borough of Newham. London, UK

The number of house purchases in the UK is set to plunge dramatically as the coronavirus outbreak causes demand to dry up, a report has said, which is likely to send house prices tumbling.

The spread of Covid-19 is already having a big effect on the market, causing a 40 per cent drop in demand for housing in the seven days to 22 March, according to data from property website Zoopla. Things are set to worsen, however, Zoopla said. It forecasts a fall in transaction volumes of up 60 per cent during the April to June period.

UKRAINE - 2019/03/12:  In this photo illustration, the Zoopla Property Group (ZPL) plc company logo seen displayed on a smartphone. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images) © 2019 SOPA Images UKRAINE - 2019/03/12: In this photo illustration, the Zoopla Property Group (ZPL) plc company logo seen displayed on a smartphone. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images) With much of the country on lockdown, high streets empty and offices and factories close, analysts predict a deep recession for the UK. Such a prospect has made Britons reconsider major purchases like a new home. Meanwhile, social distancing measures have caused property viewings and valuations to all but cease.

A rapidly growing proportion of house sales are starting to fall through, Zoopla said. Cancellations last week were 60 per cent higher than the previous week.

House prices set to take a hit

a close up of a sign © Provided by City AM Richard Donnell, director of research at Zoopla, said he does not expect an immediate fall in house prices. Yet if unemployment starts to rise and credit starts to dry up, house prices could take a hit, Zoopla said.

The Office for National Statistics yesterday said house prices were up 1.3 per cent year on year in January. But Howard Archer of the EY Item Club, said house price growth “looks certain to be brought to a juddering halt”.

Britain's Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain March 20, 2020.  Julian Simmonds/Pool via REUTERS © Thomson Reuters Britain's Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain March 20, 2020. Julian Simmonds/Pool via REUTERS Chancellor Rishi Sunak and Bank of England governor Andrew Bailey have unveiled a raft of measures to support the economy. They include cheaper lending and mortgage holidays that could help limit the number of people forced to sell property.

Donnell said: “The outlook for house prices largely depends upon how the Government’s major package of support for business and households reduces the scale of the economic impact.”

Stay at home to stop coronavirus spreading - here is what you can and can't do. If you think you have the virus, don't go to the GP or hospital, stay indoors and get advice online. Only call NHS 111 if you cannot cope with your symptoms at home; your condition gets worse; or your symptoms do not get better after seven days. In parts of Wales where 111 isn't available, call NHS Direct on 0845 46 47. In Scotland, anyone with symptoms is advised to self-isolate for seven days. In Northern Ireland, call your GP.

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