Coronavirus: The longer-term view for the housing market in Hertfordshire
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There may be a light at the end of the tunnel for movers in Hertfordshire, who have been warned to expect a challenging three months due to the Covid-19-induced market freeze.
While we saw relatively strong growth in the three months to March due to the post-Election ‘Boris bounce’, the market changed dramatically as the country moved into lockdown.
Nick Ingle, who leads the residential team at Savills in Harpenden, said activity levels will now inevitably slow for a period as people have to put off moving until some normality returns and government guidelines change.
“Transaction levels are likely to be most significantly impacted over the next three months – with a much greater emphasis on the latter part of the year and a build-up in demand as we approach the autumn market.”
He noted that transactions in China were “at or around zero” for the three weeks following movement restrictions and have since (two months later) recovered to 50 per cent of the four-year average.
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“If transactions were to fall to between 20 per cent and 40 per cent of the five-year average by June and remain there until September, total transactions for 2020 would be between 566,000 and 745,000 nationally compared to the 1,027,000 we forecast in November 2019,” he said.
The extent of the disruption to market activity largely depends on the success of measures to curb the spread of the coronavirus, he added. “In turn, this will determine the impact on the economy, which will be key to prospects for further price growth as market activity rebuilds.
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“Most economists are predicting a v-shaped downturn, which currently indicates that activity will return relatively quickly compared to say the recession of the early 1990s or the global financial crisis.
“If Government measures to support business mean we avoid significant long-term economic damage, we predict transactions will return to their long-term average by mid-2021.”
These conditions could result in falls in the region of 5 per cent to 10 per cent in the short term across the market as a whole, Nick said - but on very low transaction levels.
“Thereafter, the government support package and historically low interest rates should support a return to stronger price growth as pent up demand returns to the market.
“Our central view is that this supports five-year growth in line with our published forecasts at the end of last year, which for the mainstream market across the East of England sits at 10.9 per cent.”