The UK property market is facing the full force of the Covid-19 pandemic just as it was starting to improve following the December election.
House prices in the UK rose by 0.9 per cent in March, the biggest monthly increase since 2014 with prices increasing 3 per cent compared to the previous year, according to Nationwide.
Activity levels across the housing market fell dramatically as Covid-19 restrictions took hold, and Savills analyst Ed Hamspon said house prices are expected to drop 5 to 10 per cent, assuming a short downturn.
“We currently anticipate transactions in 2020 to fall to 20-40 per cent of the five year average, and recover to 60-80 per cent of this by January 2021,” Hampson said.
“Based on the pace of the post-recession recovery predicted by Oxford Economics, we would expect the pandemic to have a more limited and shorter-lived impact on house prices than either the early 1990s recession or the global financial crisis.”
UK real estate investment trust shares dropped significantly this year but made improvements over April.
UK-REIT Segro started the year at £9.00 and plummeted to a low of £6.954 on 19 March and improved to £8.244 by April 23; Land Securities Group dropped from £9.94 to £5.146 on 3 April to £6.398; and British Land Company £6.282 to £3.145 on 3 April and back up again to £3.85 on 23 April.
Meanwhile, online real estate agency Purplebricks shares dropped 73 per cent this year on the London Stock Exchange.
The UK-listed shares dropped from 130GXB at the start of 2020 to around 35GXB at the end of April.
The company stock took a hit when they left Australian after attempting to break the market and were slowly recovering before Covid-19.
GlobalData analyst Waffa Hassan said many consumers were delaying large purchases and moving houses, which had hurt Purplebricks.
“The company has taken significant measures to reduce costs, including suspending TV and radio advertising campaigns and significantly reducing online marketing spend,” Hassan said.
“A strong online presence has helped many companies survive and thrive during the Covid-19 lockdown.
“However, this has not been the case in every sector and the pandemic has hit some ecommerce companies particularly hard, including online estate agencies such as Rightmove and Purplebricks.”
Covid-19 cases in the UK gained momentum in late-March, peaking at a reported 8,681 on 10 April before stagnating at about 5,000 cases per day.
Prime minister Boris Johnson resumed work on Monday after recovering from the virus which had infected 152,840 people by the weekend, with the death toll reaching 20,732.