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Hello property lovers!
The UK housing market was closed for 52 days...then 1 week ago on 13th May it reopened again (in England at least). With buyers, sellers and agents trepidly going back to work, how long will it be until we're back to 'normal'?
Picture: Manchester skyline - one of our 'hotspot' investment areas
First of all, what happened in those 52 days?
Well, the UK housing market more or less ground to a halt: according to Zoopla, around 373,000 property transactions with a value of £82bn were paused due to lockdown restrictions. A 70% drop in buyer demand was recorded in the first few weeks, 1 in 7 people with mortgages are taking mortgage holidays and on 7th May the Bank of England said it's latest scenario was a 16% drop in house prices. Wow, we weren't expecting this just a few months ago, were we?
Recovery in 9 months?
As we know, there is no crystal ball. And as usual, forecasters and commentators are predicting everything from the worst recession ever seen to a bounce back in a few months. Savills is predicting a drop of between 5% - 10% this year, but is sticking with its forecast that prices will increase by 15% over the next five years. It believes property sales will be down by 20% to 40% compared with the five year average. Knight Frank expects a 3% reduction in prices this year and a 38% fall in transactions, costing HM Revenue and Customs £4.4bn in lost stamp duty. According to a survey of 467 mortgage brokers, respondents came up with the ‘magic number nine’ as the number of months until recovery. Around 77% of brokers are confident lending levels will return to pre-COVID-19 levels within nine months. A more optimistic 51% said this could happen within six months. By the way, lenders ARE still lending today: a recent article from Mortgage Solutions says that 85% of buy to let lenders remain in the market (albeit some terms have been pared back for now).
Buy now? Are you crazy?!
Yes...we just said prices are likely to fall. Yes, if you were to buy at pre-lockdown values, you are likely to be in negative equity pretty soon, if not already. Some sellers are currently offloading immediately before prices plunge further. Some will be holding fast, waiting until things 'get back to normal' so they can sell at the pre-lockdown value they were hoping for. The key thing to take away here is that whether there is a recession or not, we are currently in a HUGE period of uncertainty with less activity and demand than ever before. This means that now is a very good time to find people that are motivated to sell right now and negotiate with them! They are as worried as you that prices are falling and they are more than likely to be willing to take significant reductions to get the sale done. If you don't leverage too high and plan to hold your investment, there are some great deals out there and we are seeing them every week here at Property Brother.
This is our first blog so you may not be familiar with who we are. We are buyer's agents. We specialise in sourcing high yielding property investments in the North West of England. If you are looking to buy, or even just thinking about it, we can help! Feel free to get in touch for a friendly chat.
Happy investing,
About Pat from Total Property Group
Hi, it’s Pat Harper - Director of TPG. I believe that investing in property is one of the highest returning and safest ways to invest your hard-earned money. I also believe that even the busiest of people should be able to enjoy the benefits of property investing. These are the reasons my hands-free property investing service was born… and this is how it works:
I find properties that meet your criteria, I case manage the property through legal, I project manage any refurbishments and I oversee the lettings process. Everything is taken care of to ensure your investment is as passive as possible.
If you are looking to purchase an investment property contact me now to arrange a FREE investment discovery call. Click here to get started on your property investment journey.
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