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While the search for an effective vaccine is ongoing, the COVID-19 pandemic continues to tie many people to their homes. Some parts of the world are still in a state of lockdown. The global pandemic has impacted every known industry, and that certainly includes the real estate market. In the UK alone, house prices have recorded their highest monthly fall in 11 years.
The reason the property market is dipping under the strain of COVID-19 is pretty simple to explain. The virus outbreak has created massive unemployment in all sectors across the global economy. With many people losing their jobs overnight due to the closure of businesses, buyers are very cautious about their expenses. And since buying a home amidst the pandemic is a big risk in itself, there has been a general fall in house prices across the UK.
According to the seasoned economist, Robert Gardner, there is a good chance that the situation will stabilize at some point in time. His explanation is that although COVID-19 is a serious crisis, it's not a global recession. This means the economy can bounce back quickly if the disease starts to slow down, and lockdowns are lifted.
The UK economy and other economies are witnessing downturns because of the drastic measures governments have put in place to curb the spread of the virus. Some governments are, however, implementing policies to support households and businesses that have been affected by the global pandemic.
Unemployment numbers in the United States are hitting record highs. This is creating problems between landlords and their tenants whose income has been cut off by the virus. However, there are positive signs for the US real estate market. It has not fallen sharply as a result of the global pandemic.
Many US workers are adapting to the virus by setting up virtual offices and working from home. Office buildings are no longer fully occupied because people are avoiding commuting to work.
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When lockdown restrictions were eased in the United Kingdom around July, the property market witnessed a boom. albeit briefly. However, real estate gurus believe that the rise in house prices won't stay the same — it will likely fall again sometime in late 2020.
The good news is that the property market has now been opened for buyers and sellers. So, agents can go round to view houses again. The stamp duty cut implemented by the UK government means that buyers can save up to £15,000 in taxes. That's if they move into their properties before April next year. The UK government announced the temporary stamp duty cut as a way to help the property market resume.
It's still hard to accurately predict how house prices will change over the coming months, let alone next year.
Lloyds Banking Group has predicted that house prices may dip by 5% this year, and recover by 2% next year.
Reuters polls estimate that house prices will fall by 5% in 2020, and rise by 1.5% in 2021. All in all, everything depends on the success of the fight against COVID-19.
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