House prices: the impact of Coronavirus and how buyers are reacting

Are house prices really falling? As first-time buyers are asked to stump up larger deposits, reports are growing of haggling becoming the new norm Coronavirus impact

house prices
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House prices have fallen slightly in response to the Covid-19 lockdown – but is this modest reduction enough for prospective home owners worried about their finances after coronavirus? 

With most mortgage lenders now expecting at least a 15 per cent deposit on first-time buyer purchases, reports are growing that some buyers are negotiating hard to buy their new home at a lower price. 

It appears that the huge 16 per cent fall in house prices predicted by the Bank of England is yet to materialise – and even less dramatic (but still very significant) reductions of 10 per cent are yet to hit the housing market. 

Halifax's house price index showed that on average, house prices rose 2.7 per cent year-on-year to £238,511 in April; and quarterly, house prices increased by 0.7 per cent. It's only when you look at price variations on a monthly basis that you see the average price of a house in the UK has dropped by 0.6 per cent.

This reduction is by no means sufficient to close the gap that is being formed between what first-time buyers would have been able to afford before Covid-19 and what they're able to get a mortgage on now, two months later. And this is bearing in mind that house prices are set to rise steadily from 2021 onwards, leaving first-time buyers only a small window of opportunity to secure a lower house price.

While there are no figures yet on how many people have requested a house price reduction, property experts are hinting that something will have to give if new buyer demand is to prop up the property market post Covid-19. 

Miles Shipside, Rightmove director and housing market analyst, says:

'The traditionally busy spring market was curtailed by lockdown, but we’re now seeing clear signs of returning momentum, with the existing desire to move now being supplemented by some people’s unhappiness with their lockdown home and surroundings.

Some may be unable or unwilling to move now, but those who are ready to take the plunge have jumped immediately into action. Unique enquiries on property for sale doubled from the day before, though we expect consistent momentum to rebuild over several months rather than weeks. 

With no new seller asking price data it’s too early to comment on price movements, though high demand is needed to support a stable market. If there are attractive lower deposit mortgages available it would help sustain the recovery in activity.'

If you are a prospective buyer, one thing you can do online right now is start looking at different mortgage deals available. We've teamed up with the online mortgage expert Habito – use their free online comparison tool below to see how much you could borrow.