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The property market will suffer long after lockdown

People trying to buy or sell a home are anxious for lockdown to lift, but when it does they may find they are re-entering a very different property market.
Self-employed people are already raising concerns they won't be eligible for a mortgage when the pandemic is over and first-timers poised to buy could well find banks are no longer willing to lend to them.
Since mid-March the number of agreed house sales has plunged by 92pc. Property portal Zoopla expects the number of transactions from now until June to be around half the amount there were in the same period of 2008, during the financial crisis.
Back then property values fell 20pc in just 16 months. So does this sharp drop in transactions mean house prices will drop by twice as much as after the financial crash?
Not necessarily. The factors at play are different now. In 2008 people were borrowing more than they could pay back – since then banks have introduced stricter checks when approving mortgages to avoid this happening again.
A more accurate bellwether is the current economic climate. Already two million people have lost their jobs and more could follow, which will hamper people's ability to buy a home and could drag down prices. Those most at risk of falling into negative equity are buyers who have a large proportion of their house value mortgaged.
So how can you protect yourself? The most important thing to remember is that negative equity does not mean you have to immediately sell your house at a loss. Often the best option is to sit and wait until prices recover and you should be fine.
You could also try asking your lender for permission to rent out the property instead of selling it. This income could go some way to covering your mortgage.
Remember that any decisions you make now will have a huge impact on your finances in the future. Around one in seven households have taken up the offer of a holiday from their mortgage payments. However "holiday" doesn't mean it is going to be an easy ride: that money will still have to be paid back and interest will be charged during that time so you will end up paying more.
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