What does a second lockdown mean for house prices and will the housing market shut again?

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England has been thrown into a second lockdown, raising the question of whether the property market will be frozen again.

The rules state that from from November 5 people should only leave their homes for education, work, exercise, medical and caring reasons, and to shop for food and essentials.

But the Government has not said whether this will affect the property market. All non-essential retail has been ordered to close for a month, including auction houses.

In the first lockdown, from March to May, all but essential moves were banned and buyers were urged to postpone their purchases. As a result, around 450,000 moves were frozen.

During the current Welsh two-week "circuit breaker" lockdown, the housing market has effectively been closed again. Estate agent offices have been forced to shut and in-person property viewings are banned until Monday 9 November.

The Government and the Financial Conduct Authority, the City watchdog, have also said that mortgage holidays and the furlough scheme will be extended in the light of new restrictions.

Will the property market close in England due to the lockdown?

There has been no guidance yet what impact the new measures will have on the property market.

The Government has demonstrated that it considers protecting the property market particularly important – in England, the sector reopened on May 13, many weeks before lockdown restrictions were formally eased.

Prime Minister Boris Johnson has stressed that the Government wanted to allow business to continue and keep the economy going.

Even areas in Tier 3, the highest level of coronavirus restrictions, property viewings were allowed providing all parties follow social distancing guidelines and wear PPE, estate agent offices could remain open for business and removals firms could continue to work.

The local lockdowns that happened before the tier system was introduced, in areas such as Lancashire and Birmingham, similarly did not involve changes to property sector guidance. Markets have been allowed to function under the same social distancing guidelines that are currently in place across the country.

Likewise in Scotland, which currently has more stringent national restrictions, all aspects of a property sale or purchase are also still allowed.

Can I still move house in Wales during the circuit breaker?

Buyers and sellers can still move house if they cannot postpone their transactions until after the circuit break.

Removals, surveys and valuations can still go ahead in line with guidance on working in other people's homes, which includes maintaining a two metre distance and wearing PPE.

But in-person property viewings can no longer go ahead and high street estate agents must close their offices for the two-week period. Virtual viewings are still allowed.

Travel to or from a second home in Wales is also banned.

How will the second lockdown affect house prices?

Lockdown and the rise of working from home have in themselves become factors driving a surge in house moves – added restrictions may mean more urgency for those who want to upsize. Even if a local market is suspended, last time that simply meant demand built up and flooded the market when restrictions lifted.

Yet any hit to the economy is a serious threat to house prices. And if restrictions halt activity for an extended period of time, future sales could be mired by logistical delays from the backlog and the imminent end of the stamp duty holiday.

The relationship between a second lockdown and house prices is a complex balance that could tip the market either way.

Transaction data shows that the market is being driven by wealthy upsizers. In the short term, increased measures and an increase in working from home will further entrench buyer demand for larger properties with outdoor space that are further away from people’s workplaces.

Mark Hayward, of Propertymark, an estate agent trade body, said a second lockdown “could reaffirm people’s reasons and desire to move even more".

A longer term shutdown, however, is “more of a risk”, said Lucian Cook of estate agency Savills. If unemployment stays higher for longer, buyers will become more cautious and lenders will be more risk averse, said Mr Cook. The sectors of the housing market that are particularly dependent on borrowing – primarily the first-time buyer sector – will be more constrained.

House prices would then be hit harder by the problems that are currently looming on the horizon, which include the possibility of a no-deal Brexit, potential tax rises in the autumn Budget and the end of the stamp duty holiday in March 2021.