The outbreak of Coronavirus disease 2019 (COVID-19), which began in Wuhan, China, in late 2019, spread to 203 countries by March 30, 2020.
With unprecedented government interventions around the world, the transmission of severe acute respiratory syndrome Coronavirus 2 (SARS-CoV-2) initially appeared to be contained in China.
A second wave of Coronavirus infections is surging ahead now in China and other countries too.
Last 14 days several media outlets and government agencies have reported an outbreak of the second wave of COVID-19 in Wuhan.
In a frenzy to control the second wave of Coronavirus, the Chinese Government has even prevented its nationals from re-entering China.
Can history give us any clues, what is ahead of us?
In 1919 it was the second wave that killed millions which were due to the Spanish flu. The Spanish flu was a deadly influenza pandemic caused by H1N1 influenza. It lasted from spring 1918 through spring or early summer 1919.
The fatal H1N1 infected 500 million people—an astonishing third of the world’s population.
In 1919 they did not have the same population we have now, nor did we travel with the same frequency as we do now.
We need to abide by social distancing rules, upon easing of restrictions in confined spaces like at cinemas, football stadiums, gyms, trains, and air travel. If we fail to do so, we may be in a worse predicament than in 1919.
Over the past few weeks, several countries, including the UK today announced plans to start easing the coronavirus restrictions.
All nations are aware of the risk of relaxing the restrictions too early. The result of getting it wrong could spark a second wave of coronavirus infections, warned Centres for Disease Control director Robert Redfield, MD.
Dr Redfield believes this second wave could be even more deadly with devastating results. Speaking to The Washington Post, he said there is a possibility that “the assault of the virus on our nation next winter will be even more difficult than the one we just went through,” because it will happen during flu season.
A second wave of disease outbreak happened with the (Spanish Flu) 1918-1919 influenza pandemic. That pandemic delivered a deadly three waves. The second wave was more deadly than the first. Recent flu pandemics have also delivered multiple waves, including the 2009 H1N1 influenza, which started in April of that year and had a second wave in the Autumn.
Many experts around the world agree with Dr Redfield that a second wave of the Coronavirus is inevitable, and we urgently need a vaccine.
In South Korea, which has suffered Asia’s worst outbreak outside China, the emergence of new clusters and the risk of imported cases has rattled officials.
The number of new Coronavirus cases has spiked across China and Singapore squashing hopes that the region had contained the outbreak.
Experts say the sudden increase in cases has revealed the limits of both China’s complete lockdown of citizens and the massive public testing and social distancing campaigns rolled out across Asia.
The Chinese National Immigration Administration has reported that about 120,000 people a day had entered China from abroad since the World Health Organization labelled the virus a pandemic on March 11.
An independent market maker, in futures Mr John Dolan said: “If we don’t get a second wave, eventually housing improves again, on the other hand, if we do get a second wave, here and globally, the economy might collapse even further. It’s maybe a small probability, but it could have a large impact if it happens.” He said.
A research conducted by property portal Zoopla, reveals there are an estimated 373,000 property sales on hold due to the virus.
Mr Sajjad Ahmad, the CEO of the British Landlords Association, said: “If there’s a second wave, it could be disastrous. The fear will rattle the housing market. It will affect buyers and the banks’ ability to lend” he said.
The London house prices could suffer post Coronavirus. Chinese agents are advising clients that Germany is a safer bet than London. Foreign property investors spend, according to Hamptons International, stands at 8.2 billion.
UK housing market not helped by Spooked banks
Most lenders straight after the Coronavirus outbreak withdrew 95% mortgages and replaced them with 60% mortgages. Which means would-be buyers required a deposit of 40%. It would seem some lenders already factored in a housing market crash, by only offering 60% mortgages.
Some lenders have since increased the LTV to a few mortgage products, while hundreds of other mortgage products have been withdrawn in the wake of the Coronavirus outbreak.
10% deposit only mortgage products seem to be disappearing quickly. Ninety-seven products are currently still available, out of 776 products that were once available a few weeks ago.
In the past four weeks, banks and building societies have both withdrawn an astonishing 1,500 mortgages.
First-time buyers looking for a low-deposit mortgage will no longer be able to afford to buy a home. We will have to wait and see if the government introduces a new help scheme for first-time buyers.
Barclays pulled all deals that required less than a 40 per cent deposit immediately after the lockdown was announced, only to bring them back two weeks later.
The UK is preparing for a single coronavirus-related downturn in the housing market. Some experts are concerned there could be a second wave of COVID-19 infections. The second wave of Coronavirus infections would cause severe problems for residential and commercial landlords.
Generally, nearly all pundits agree UK House prices are going to decline. How bad things get is something no one can say for certainty, we remain at the mercy of the Coronavirus.
Factors like the second wave of infections and how long any future lockdown will last will determine what happens to the UK house prices.
Should the UK face a second wave of Coronavirus infections, Commercial landlords may suffer more than residential landlords. Commercial tenants are already asking their landlords to take a haircut between 3 to 6 months.
Landlords have an option to evict their tenants which landlords understand would not be a good move.
If they do, they are likely to end with an empty property. They will have to pay full business rates on a vacant property. Under the current climate reletting a commercial property could take up to a year in some cases.
Even if they do manage to relet, incoming tenants probably will want to negotiate a rent-free period between 3 to 6 months, which seemed to be a common theme even before COVID-19. For these reasons, commercial landlords will have to work with their tenants.
New COVID-19 strain & The Housing market
With COVID-19 it was highly likely we would have a second wave of infections. What we were not prepared for was for this new strain which has spooked the whole world. Within 24 hours some 40 countries have banned all flights from the UK. This list is growing by the hour.
The wider economy is taking a battering and to think somehow we are going to see a V type recovery is wishful thinking. Other world economies are struggling financially too, and this has an impact on our economy too.
Housing Market FAQ
When will UK house prices fall?
This depends on how far the government goes in supporting the economy by way of pumping money into the economy.
Will the stamp duty cut affect house prices?
Yes, it has helped.
How on earth can UK house prices be at record highs right now?
With the Government loans, grants, near 0% interest and the stamp duty changes have all contributed towards the property market dead cat bounce.
Outlook for future housing market crash?
2021 is likely to be bleak. Long term we have too many unknown factors Brexit etc.
Will house prices crash when furlough ends?
Due to a lag some 6 months after furlong ends we are likely to see the weakness feed into the wider economy.
The British Landlords Association is a free national landlords association for UK landlords. Join us for free now!
Source: British Landlords Association
Author: Sarah Featherstone
Date: 11th of May 2020 (Re-edited 21st of December 2020)