PwC: The housing market won’t recover overnight
Despite talk of pent up demand fuelling a housing market recovery the rebound will likely be a slow and gradual process, warned James Durham, economist at PwC.
The Brexit deadline, losses to the hospitality and tourism sectors, as well as people moving out of major cities are also likely to have a dampening effect on the market.
Durham said: “It’s good news that estate agents and property websites have reported a significant increase in enquiries since restrictions on the housing market were lifted, due to the pent up demand.
“However, with considerable uncertainty in the economy, we still expect many people to put off making any major financial decisions until the outlook is clearer.
“This is likely to dampen the number of transactions that take place over the coming months, meaning a swift bounceback of the housing market is unlikely.”
He added: “Brexit is still on the horizon and a ‘no deal’ may put further downward pressure on house prices, both before and after the transition period ends on 31st December.
“Looking ahead, rising unemployment and the risk of redundancies is likely to have a negative impact on the housing market over the coming months.
“The impact on the housing market is likely to be felt disproportionately in areas with large hospitality and tourism sectors, which have been most affected by the virus.”
He went on to predict that London will be more impacted due to the high prices relative to wages, which means properties in the capital typically require larger mortgages with more risk.
He reckoned people will continue moving away from the big cities, to properties with more space to work from home.
He said: “There may be a move out of central locations in major cities in the medium-to long-term.
“While offices are reopening, working from home is likely to be more common than it was pre-pandemic.
“If there is no need to commute on a daily basis, it’s possible people will start to look to live further outside of cities, where they can get more space for a more reasonable price.
“There may also be a rebalancing across cities in the UK, as businesses reconsider their footprint and people look to take advantage of lower living costs in cities like Birmingham and Manchester.”