UK house prices to drop 13 per cent this year, CEBR predicts

UK house prices to drop 13 per cent this year, CEBR predicts

 

The consultancy firm based its prediction on research from the Cambridge-INET institute which suggested the average UK worker should expect to face a 35 per cent loss of income over the next four months, as a result of the coronavirus pandemic.  

Analysis published by CEBR last week also showed economic activity had gone down by 31 per cent since the lockdown. 

 

Some regions hit harder 

The firm said some housing markets would be worse hit than others as the loss of jobs and incomes are not expected to affect the whole of the UK equally. 

It is those who work in sectors such as manufacturing, construction, retail, accommodation, food services and other services sectors who are most likely to face a change in income as a result of the coronavirus pandemic. 

According to CEBR, Yorkshire and Humber and Northern Ireland have the highest shares of employment within these industries at 60 per cent and 59 per cent, respectively.  

Wales and the East of England are the next two regions with the highest employment shares in these sectors with 55 per cent, and 54 per cent. This is above the national average of 48 per cent.  

As a result, CEBR said the housing markets in these regions faced the biggest potential disruption due to job and income losses in the months ahead.  

 

Mortgage borrowers vs renters  

The crisis is expected to have different impacts on renters and those with a mortgage, CEBR said.  

Some 47 per cent of private renters are under the age of 35, and a study from the University of Cambridge found those under 30 were most likely to have already lost their job or had their hours reduced. 

CEBR said given that the average private renter household in England spends more than a third of their income on rent, even a temporary reduction in incomes could lead to tenants becoming unable to pay their rent 

The CEBR report said: “Once households will burn through their emergency savings, they will have to make tough choices on where to cut down expenditure.    

“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.”