UK housing market analysts have a problem. There is currently very little relevant data to analyse.
Land Registry and ONS data sets, which offer the most comprehensive and reliable picture of the nation’s residential market, have a two-month lag. The last available price stats were for January 2020. Mortgage lenders can provide more current numbers, yet even the latest Nationwide house price index was out of date before it was even released. It reported a 3% annual uptick in March sale prices. But the numbers were collected before the government froze the housing market. Now, everything has changed. Savills has since predicted a short-term price drop of 5-10%.
Looking back is redundant. So instead we have looked to the future. Italy’s coronavirus outbreak is two weeks ahead of the UK’s and their property market is similar to ours. As with London in the UK, the Lombardy region is both the centre of Italy’s residential market (it accounts for a quarter of national transactions) and the epicentre of the outbreak. The Italian property market can give us insight on what will happen to our own.
The lessons? Italian transactions fell by 8% in February, well before the lockdown began. That shows coronavirus’ sway over sentiment will last beyond the lifting of social distancing restrictions. Airbnb landlords are under particular strain. And the second home market is about to head over a cliff edge.
As for prices, “normally during a crisis, house prices drop at half the rate of the stock market” says Roberto Magaglio, managing partner of Engel & Völkers in Milan. “In 2008, the Milan stock exchange fell by 50% and Milan property prices fell by 25%.” Currently, Milan’s stock market is about 30% below its February levels.
There is a ray of hope. According to Google Trends, at the end of March, UK search interest in property portals had fallen by 50% since February. In the first week of Italy’s lockdown, inquiries stopped completely, says Diletta Giorgolo of Sotheby’s International Realty. But in the second week, after people had adjusted, buyer web traffic and calls started to pick up again. “They can’t view but they are planning” she said.
[Source: telegraph.co.uk/property, 7 April 2020]
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