Why pandemic effects on property are expected to be short-term
We think it’s high time for a little reassurance in light of the current global situation.
The present COVID-19 pandemic has seen economies across the world grind to a halt. This is obviously concerning for a wide range of people across many industries. Property is no different, as businesses across the property spectrum struggle with uncertainty. Buyers are hesitating, transactions are slowing and lettings are difficult. However, it’s well worth noting why this is happening. At least in the UK, the economy has slowed, not because everyone, or comparatively many people (at the time of writing) have become ill, but because measures are being taken to keep COVID-19 at bay. This just means what everybody knows, that this situation is temporary, and activity in the markets will resume.
In fact, if you’re a buyer you could be in a good position. Although there could be fewer properties available, there will be people who need to sell fast and will be more inclined to accept low offers than say two weeks ago.
But what about house prices? Industry experts Savills have published an excellent once over, with the key message: they stand by their original forecasts, published a few months prior to the Coronavirus outbreak, back in November.
These forecasts present excellent predicted growth especially in Northern England. It is a relief to hear that that they are sticking to their guns on this, and it really come from what we have already said – this is a temporary glitch in the market that will re-emerge. Unfortunately when we will see an uplift is somewhat up for grabs.
Savills explain the three fundamental effects of the pandemic on the market are on 1. sentiment – making buyers cautious in the short term. 2. The practical impact it has on transactions. 3. The impact on the economy and the traditional drivers of affordability.
The report states,
“The emergency cut in the bank base rate, economic stimulus from government spending pledges and the willingness of mortgage lenders to take a considerate view of short-term mortgage arrears, are designed to mitigate the impact. Meanwhile, the perceived security of a bricks-and-mortar investment in times of uncertainty should help to underpin values.”
Essentially, this points to a temporary hiatus through this period of economic suspended-animation. But, thanks to the long lasting, and firmly held, belief that bricks and mortar stand for stability, we will see activity returns before. As with all matters at this time, it’s about patience.
Having said that, if you are a buyer from overseas and your currency happens to be pegged to the dollar, you can buy at extremely reduced rates, thanks to the value of the pound dropping against the dollar of around 10% over the last week and a half. For those wanting to capitalise on this, now may be the best time.
Here at Aspen Woolf, we offer our clients the best in UK property investment. Our focus is currently on Northern England where high capital growth combines with strong rental yields. Have a look at what we have to offer.