With the housing market finally re-opening following government guidance, we have been looking into how the COVID-19 lockdown has affected the housing market.
Advocate Finance have been keeping up to date throughout the lockdown with regular webinar attendance and a close eye on industry press releases .After a recent webinar with the Managing Director of a leading London based chartered surveyor firm; we have summarised the key information that will give us a picture of the housing market moving forward.
- The start of 2020 saw a boom in property purchases following the election. With uncertainty finally concluding, house prices were gradually rising. Lockdown halted this trend meaning there is now a lot of pent up demand for investing.
- Will there be a dip in house prices? It is still too early to say however any potential dip is predicted to only be short term for several reasons:
- There is still a high demand which naturally drives prices up.
- Interest rates are still at a historic low and most sellers can still afford their mortgages meaning they are not necessarily desperate to sell.
- As it stands ,there are no figures to back up a decrease in house prices ,therefore, surveyors will be basing their values off pre COVID-19 figures and Estate Agents feedback.
- Any dip will be as a result of panicked sellers needing to sell and people placing low ball offers and trying their luck. However, as the economy recovers, it is predicted that house prices by quarter 2 2021 could be even higher than they were pre COVID-19.
- Over the next 3-6 weeks, until property transactions start completing, and Land Registry gets updated, Surveyors are going off pre-lockdown sale prices and feedback from Estate Agents as to what people are offering and what interest comparable properties are receiving.
- The term “material uncertainty” will be used in valuations until sufficient sales information becomes available. Therefore, lenders will still be applying an element of caution to their products and criteria along with continued restrictions on loan to value for a short period of time whilst the state of the property market becomes clear.
- The final point to consider is the UK economy. The Bank of England has warned that the UK economy is likely to suffer it’s sharpest recession on record this year, even if the lockdown is completely lifted by the end of September. The Bank has however said although the economy could shrink by 14% in 2020, it expects the recovery to be by quarter 3 2021, with a growth of 15% predicted.
- With the property market historically being one of the key factors in any economic recovery, the Government could implement incentives to encourage more investment one being a possible temporary suspension on stamp duty land tax, reducing the tax implications for landlords.
We should now hopefully see a slow and gradual return to normality within the property sector, and whilst still adhering to social distancing requirements, Estate Agencies, Conveyancing Firms and Surveyors are now able to return to work. Of course, there will be a backlog of workload that will take time to recover so, just like many industries it will be a staggered return to normality.
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