Coronavirus and the UK property market

Today I want to talk to you about the Coronavirus and its effects on the UK Property Market. At the end of this article, you will have accurate information about the current impact of the virus, some ideas on how to stay safe and as an investor what you should do if you have property investments or are planning to invest in property.

By now, most of us know what Coronavirus is and that it is spreading like wildfire. While most sources say it is likely to cause only mild to moderate illnesses amongst the young and healthy, older people and those with a compromised immune system are more at risk. 

As of 27 March (at 4.30pm GMT), over 509,000 global cases have been reported with over 23,000 deaths. That’s a 4.6% mortality rate. In the UK, we have just under 15,000 cases with 750 deaths. Worth noting these are just the reported numbers – the actual reality is really anyone’s guess. And the virus does not differentiate based on age, ethnicity, religion or your bank balance. Here’s an interesting list of people that have tested positive for COVID-19

• The Queen’s aide
• Mario Diaz-Balart, the first U.S. congressman
• Wife of the Canadian Prime Minister Justin Trudeau (Trudo)
• EU chief Brexit negotiator, Michel Barnier (Mishel Barniey)
• Callum Hudson-Odoi, the English footballer
• Tom Hanks and wife Rita Wilson
• Idris Elba
• Daniel Dae Kim

Best wishes to all of them and everyone else that has tested positive.

The UK government is still being reactive but has finally gone into lockdown as of 20 March but with only public places like bars, pubs, theatres and restaurants being shut down. So I urge each one of us to start being a positive force against the Coronavirus. 

How can we do that? 

By taking extra precautions and educating ourselves. We are still learning more about the Coronavirus every day but we already know that washing hands with soap, literally any soap, is extremely effective to kill the virus. The virus is surrounded by a fat layer which essentially is broken down by the soap’s molecules, destroying it.

 
But for this process to work, you need to wash your hands for at least 20 seconds. I have shared the link to a video by NHS explaining this in more detail.  https://youtu.be/-LKVUarhtvE .

 
I feel we can do more. Socially distancing yourself from others by staying home with your family is a good start. 
But did you know Coronavirus can live on surfaces as well e.g. 

• in the air for 3 hours, 
• cardboard up to 24 hours, and 
• up to 2 to 3 days when it comes to plastics and metal. 

This information comes from the US National Institute of Health and a study published in the New England Journal of Medicine. 

So if you have responsibly locked yourself inside your house, you still get supplies, groceries, post and not to forget those random purchases from Amazon and eBay. Be careful and wash your hands after coming into contact with these items, let them sit around for an appropriate amount of time or use appropriate disinfectants to clean them. And take-outs – while the exact temperature is yet to be confirmed, we know heat kills the virus with some suggestions around 30 degree celsius. So consider heating your takeout e.g. microwaving it for a minute before eating.

And most of all – please please – before trusting any information, authenticate the source. We all have a responsibility to ensure we verify any information that we use or especially decide to share with others, for example via Facebook or WhatsApp. Else, we are kind of acting like the virus – except spreading fake news like wildfire. 

 
Now coming onto the financial markets and property.

 
FTSE 100 has fallen by nearly 30% since late February, wiping over £500 billion from the value of companies on the index, and that number is far bigger when considering the FTSE All-Share of course due to more companies being included. Similar impacts are seen across global stock markets.

 
Property shares have already seen big drops as well, shares being the keyword. So far the UK property market has remained steady, after enjoying somewhat of a recovery with over 2% year on year growth due to the outcome of the general election and the certainty offered by the UK officially leaving the EU at the end of January.

 
But now the property market faces uncertainty again thanks to this coronavirus pandemic. Remember, it is the buyers and sellers in the market that drive the price – and fear always leads to prices dropping. And there is always a delay in the property market compared to the wider economy. 

So, what should you expect? 

It is really difficult to say given no one can accurately predict how things will pan out over the coming months. Personally, based on various recent models (e.g by Imperial College London and the Oxford model suggesting the possibility of half of the UK population already being affected), I still hope the situation starts reversing by summer. It is not impossible as China has proven that strict measures can lead to positive results. 

But the property market is bound to be affected. If we are successful in controlling the virus by summer, then the impact is likely to be smaller and more short-lived. However, if things get worse, then the impact is likely to be larger and last longer. So if you are an investor that’s already invested in property and are able to hold: then I suggest you sit tight. Enjoy the rental returns and the property market will bounce back once the situation starts improving as it is undoubtedly one of the most resilient of assets at least in my personal opinion – recovering from the financial crisis and the Brexit uncertainty. And remember any dip in property prices isn’t real for you till you actually sell.

So, what if you are looking to invest in property? 

Right now, I would suggest waiting at least for a few weeks. Given the circumstances and uncertainty, having access to backup cash is likely a good thing. Keep an eye on how the coronavirus outbreak behaves to the UK government’s measures and also how people are reacting. You want to find that moment where things are still not great but there are some positive signs of stability. Note – I don’t say when the situation starts improving as that point, the market will already have started increasing. Remember, buy when everyone is scared and sell when everyone is greedy. 

Having said that, don’t forget to be human. Please continue to be vigilant and help those around you as far as you can, starting with friends and family – social distancing, sharing valuable information, providing emotional support, after all, the virus doesn’t spread via WhatsApp or a phone call, offer financial support if you are able to, sharing resources and quality information as far as possible are just a few examples that you can help.

So if you found this article useful, please ensure to share it with those you care about. And let us know in the comments how you are dealing with the coronavirus? Any tips to share? And of course any views on how you think the property market will respond. Remember, most importantly, stay safe. 

REFERENCES
Vox (2020, March 18) – How soap kills the coronavirus

World Health Organization (2020, March) – Coronavirus disease (COVID-19) Pandemic

GOV.UK (2020, March 29) – Number of coronavirus (COVID-19) cases and risk in the UK

Worldometers (2020, March 29) – United Kingdom Coronavirus: 19,522 Cases and 1,228 Deaths

BBC News (2020, March 13) – Canadian PM Trudeau’s wife tests positive for coronavirus

CNN (2020, March 13) – Sophie Trudeau, wife of Canadian Prime Minister, tests positive for coronavirus

Action News Jax (2020, March 19). Coronavirus: Celebrities, athletes, politicians, others announce positive tests for virus