House prices to fall by 13% as income is battered by lockdown

UK-wide house prices are set to fall by 13% by the end of 2020, according to the latest analysis from consultancy centre Cebr.

Original source: Estate Agency Now

The group has attributed the forecast to a lack of transactions, high uncertainty and falling incomes amid the ongoing pandemic.

Cebr said that housing is the single biggest expenditure item faced by most households, which means that the shortfall in incomes has a “tremendous potential to disrupt the UK’s housing markets”.

The findings follow its published analysis last week that revealed UK economic activity under lockdown is down by 31%, and workers will face an average of a 35% loss of income.

Cebr warned that despite the “vast package of support” offered by the government, the lack of demand across sectors will mean that “some businesses cease to operate, many workers will lose their jobs and a lot more will face a cut in incomes”.

It said that the impending loss of jobs and incomes “won’t be evenly spread across the country”, however, which will result in an uneven distribution that will “hit some housing markets harder than others”.

Yorkshire and Humber and Northern Ireland had the highest shares of employment in at-risk sectors, at 60% and 59%, respectively. Wales and the East of England had the second highest employment positions at risk, with 55%, and 54%, well above the national average of 48%.

Cebr said that the housing markets in these regions therefore face the “biggest potential disruption” due to job and income losses in the coming heads.

It added that the pandemic will have “different impacts” on renters and those with a mortgage.

It argued that the private rental sector could be most affected, as 47% of private renters are below the age of 35, while those under 30 are “much more likely to have already lost their job or be on reduced hours” following the crisis.

Cebr added: “Given that the average privately renting household in England already spends more than a third of their income on rent further goes to show that even a temporary reduction in incomes could lead to tenants becoming unable to pay their rent, making the private rented sector the catalyst of the impending housing crash.”