Yahoo Finance Halifax warns on coronavirus risk to UK housing market recovery
The coronavirus is a risk to the fragile recovery in the UK property market, according to Halifax.
One industry expert said a recent revival in confidence was “hanging in the balance” after the lender released its latest figures on the state of the market.
Halifax figures show property prices rose 0.3% between January and February and are now 2.8% higher than a year ago, taking the average price to just under £241,000 ($309,000).
Russell Galley, managing director of Halifax, said its closely watched house price index (HPI) showed “continued improvement” in February, with sustained buyer and seller activity compared with recent years.
He highlighted Britain’s high employment levels and a competitive mortgage market with interest rates at historic lows, but the pick-up has also been widely linked to the political climate.
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The figures are the latest in a string of signs the housing market has gained momentum since prime minister Boris Johnson’s election victory broke the political deadlock at Westminster in December.
Several surveys in recent months have shown rising numbers of sales and of buyers and sellers looking to move. Confidence has increased amid at least a short-term easing of the Brexit uncertainty that has held down activity since the EU referendum in 2016.
But there are growing question marks about any potential impact of the COVID-19 outbreak.
Galley said: “Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.”
Guy Harrington, CEO of real estate lender Glenhawk, also highlighted the risk. “The question on everyone lips now will be whether the damage that coronavirus is doing to other parts of the economy seeps into the housing market, and if so, just how catastrophic will it be?”
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Several analysts have already downgraded their forecasts for UK economic growth this year because of the coronavirus. Bank of England governor Mark Carney warned of the risk of a “large” but likely temporary economic shock.
Ben Johnston, director of property app Houso, said the Bank of England could “feasibly” follow the US Federal Reserve in cutting interest rates further to stimulate the economy.
He said the budget next week could also see the UK government slash stamp duty if it wanted to encourage housing market activity. But he added: “This might not be enough until the coronavirus has stabilised and the threat has diminished.”
The government is set to unveil its economic plans to alleviate the impact of the outbreak and its wider political agenda in its budget announcement on 11 March.
