[1805627] VM cannot be accessed with console

Description of problem:
When I create a Ferora/RHEL VM, I'm unable to access the VM with UI console or virtctl console <vm-name>

Error returned by virtctl command:
Successfully connected to fedoracloudbase console. The escape sequence is ^]

You were disconnected from the console. This has one of the following reasons:

• another user connected to the console of the target vm
• network issues
  websocket: close 1006 (abnormal closure): unexpected EOF

Although it says successfully at first connected, the connection is closed immediately.

Version-Release number of selected component (if applicable):
4.4.0-0.nightly-2020-02-17-022408
CNV 2.3

How reproducible:
100%

Steps to Reproduce:
1. Create VM from the attached yaml
2. Start it
3. Open console, either in UI of virtctl console fedoracloudbase

Actual results:
Error stated above

Expected results:

Additional info:
I have also tried the same with cirros VM created from container, where the console works, fine. So I suspected it could be storage related, however, creating the fedora VM with kubevirt/fedora-cloud-container-disk-demo
container leads to the same error.