Price momentum before the pandemic struck is another difference. In the run-up to the global financial crisis, the market was giddy, with annual house price growth in 2007 at almost 10pc. By contrast, in January 2020, annual house price growth was just 1.2pc.
“In the run up to 2007, lax attitudes to lending helped sustain the back end of a bull run, with very strong house price growth running into the crisis,” says Cook. “There was a natural reaction as the credit crunch occurred. We haven’t had the same cause so there has not been the same house price growth to require such a contraction in values.”
Still, says Rubinsohn, “house price to earnings ratios are still stretched, and pretty much every region is above its long-term average.” While price growth might have been sluggish, affordability rates are at a crunch point.
One of the problems of the early Nineties crash was that mortgage rates were above 15pc. People couldn’t borrow to make up the difference in what they could afford to pay.
That is less of an issue now, as in March, the Bank of England dropped interest rates to a record low of 0.1pc. It’s possible to get mortgages with rates of a tenth of those in the early Nineties.
Banks are very risk-averse, with only low loan-to-value mortgages available. House prices won’t necessarily fall as a result, but transaction levels will stay lower for longer, says Cook. “It means the equity-rich part of the market will be active, rather than that which is more mortgage dependent.”
A new kind of forced seller
Cook argues that due to forbearance from lenders and the low interest rate environment, there won’t be as many forced sales of owner-occupied homes this time around, which lead to some of the biggest house price falls.
But there could be a new group of forced sellers who will have to accept price cuts. The private rental sector will be the pressure point, says Neame.
There is a concentration of younger people in the industries, such as hospitality, that are worst hit, and as such unemployment will disproportionately hit renters. In turn, this means it will be landlords who will bear the immediate brunt of the economic shock. Although they are eligible for mortgage holidays, many rely on rents as income and will no longer be able to cover their costs.