New research shows that more than 520,000 UK house sales will be abandoned this year, after the government ordered a temporary freeze on the housing market last month due to the coronavirus outbreak. Property consultancy Knight Frank said the 38% drop in the number of house sales in 2020 would have a ripple effect across the property industry, hitting retailers, removal companies and even government coffers.
Assuming physical distancing rules stay in place throughout May but are gradually lifted in June, the property market downturn will result in 350,000 fewer mortgage approvals in England and Wales including 150,000 fewer mortgages for first-time buyers, Knight Frank added.
Homeowners are also expected to spend £7.9bn less on DIY and renovations this year, while removals companies will lose out on around £395m. Meanwhile, the treasury is expected to lose out on around £1.6bn in VAT, on top of significant losses in personal and business tax revenues.
While the exchequer is also expected to forgo around £4.4bn in stamp duty, Knight Frank is calling for a stamp-duty holiday as part of efforts to jump-start the property industry once the lockdown measures are lifted. The property consultancy said those measures should also including extending the help-to-buy programme and relaxing planning rules.
Tom Bill, head of London residential research at Knight Frank, said: “Moving house has a clear multiplier effect for the economy. Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan.”
Property website Rightmove said it had already recorded a 40% fall in the number of homes listed for sales since 26 March, when the government effectively froze the housing market by telling buyers and sellers to delay moving home if possible and halt viewings until restrictions are lifted.
Rightmove’s figures suggest that although would-be sellers are still allowed to deal with estate agents, many have put plans on hold. The website, which covers around 95% of the market, said that there were 65,531 new listings between 8 March and 11 April, a period straddling the date that the lockdown came into effect.
