The industry has begun to recover after the Government relaxed measures to allows house viewings, the reopening of estate agents and house moves where possible. This came in order to salvage a market with HMRC data stating transactions had fallen by 53 percent in April compared with the same month in 2019. With the market beginning to restart, there are fears a huge house price crash could occur later in the year.
Speaking to Express.co.uk, director of the Association of Homebuyers, Jonathan Rolande stated house prices could crash if unemployment begins to rise.
He said: “The market has been in hibernation.
“It’s in the recovery but it could go either way.
“It’s whether the money dries up or if unemployment really starts to hit.
Uk housing: Expert predicts how hosue prices could drop
“I think people have got an appetite to get going again so it might level out.
“However, if there is demand and property doesn’t come to the market we could have a rise in property prices.
“So for the wrong reason, prices could rise and create another issue.”
Due to proposals such as the mortgage holiday and the furlough scheme, there is hope the sector has been given sufficient support to recover.
The mortgage holiday has also been extended for a further three months from this month.
The furlough scheme has also been extended until October although employers will need to begin to pay some of the payments.
The scheme will be updated in August to get employees back to work and boost the economy.
In statistics from the Office of National Statistics, the number of people claiming unemployment benefits rose to 2.1 million in April.
That is the highest monthly rise since modern records began in 1971.
There is fear that unemployment may rise later in the year as companies begin to come off the furlough scheme.
High unemployment is one of the main ingredients to a house price crash while inflation rates are the second factor.
Mortgage lender Nationwide released its latest house price index this week which stated values had decreased by 1.7 percent in May when compared with April.
That is the largest monthly fall since February 2009 during the financial crash.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, explained: “In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum.
“Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election.
“But housing market activity has slowed sharply as a result of the measures implemented to control the spread of the virus.
“Indeed, data from HMRC showed that residential property transactions were down 53 per cent in April compared with the same month in 2019.”