Zoopla has warned the coronavirus will paralyse the UK property market, sending house sales into freefall over the next few months.
The leading property website predicted sales will sink by 60% over the next three months compared with a year earlier, and keep falling in the summer.
The company’s figures suggest the pandemic has knocked the market sideways, with buyer demand last week 40% lower than a week earlier.
The data reflects the state of the market before the UK government ordered the public to stay at home for all but essential journeys on Monday.
Buyers appeared to be holding back amid heightened concerns over the growing crisis even before the current lockdown. Separate figures show UK workers’ fears for their jobs are at an eight-year high, while fears about infections during viewings and the future of the market had already taken a toll on activity.
Richard Donnell, director of research and insight at Zoopla, said economic shocks like the current situation dent confidence and “put a brake” on the number of people looking to move home.
He called COVID-19 a “major new challenge,” undermining the fragile recovery in confidence and activity seen since prime minister Boris Johnson’s December election victory.
But Donnell did not predict any “immediate impact” on prices, saying it largely depended on how far the government could insulate firms and households from the economic fallout of the virus.
Zoopla’s latest report sent to journalists on Thursday 26 March said times of “economic stress” typically would send prices spiralling downwards, with higher borrowing costs and rising unemployment forcing homeowners to sell fast.
But it said the government’s proposed mortgage holiday for those struggling because of the outbreak could limit the number of forced sales, allowing homeowners to stay put and maintaining prices.
Donnell also declined to predict when activity could return, noting: “The timing of any rebound in housing market activity depends upon when new restrictions are lifted, and the extent to which households and businesses are able to return to a normal way of life.”
It comes after Zoopla’s rival Rightmove (RMV.L) also warned property sales had started to fall through and the market faced a sharp slowdown in activity last week.
Rightmove announced it had slashed fees by 75% for estate agents and housebuilders putting properties on its platform, in a sign of the severity of the downturn for estate agents.
Yahoo Finance UK reported on a rise in cancelled viewings earlier this month amid fears over face-to-face contact, as well as wider economic uncertainty deterring transactions and residential building work.