In today’s technology-driven world, activity in the fast-moving UK property market continues behind the scenes. Here’s why investors can use this time to “get their ducks in a row”.
Despite a difficult end to the first quarter of 2020, activity has already begun to return to the sector. And while transactions may be carrying on at a much slower pace, people and businesses are finding ways around the barriers to keep the market moving.
For many property investors, now is a prime time to continue their property research. According to buying agent Hannah Aykroyd, most property searches take between two and six months. This normally involves extensive research of a location as well as property specifics. Therefore, investors should continue their searches using the raft of technology available, in order to get moving quickly after lockdown.
“Rather than feeling stuck or helpless, this time can be used fruitfully by buyers and sellers to get their ducks in a row,” she says.
The practicalities of buying and selling properties right now are undoubtedly more challenging than usual. Due to the coronavirus lockdown, many building sites closed or slowed their production. Physical property viewings became impossible, and some lenders baulked and withdrew products. The conveyancing process also presented a number of issues.
However, many of these issues are already being resolved. Last week, we reported that a number of building sites were reopening. Since then, more have announced a return to work, meaning the construction sector is back in business.
Virtual viewings were already an option for some buyers, sellers and tenants, but are now more popular than ever. People are getting to grips with new technologies, and many believe this will continue after lockdown. Estate agents and investment companies are also able to carry out most paperwork remotely, while new solutions for conveyancing are beginning to emerge.
Aykroyd, who focuses on prime central London, adds: “Indeed, we have currently been submitting blind cash offers on behalf of key investors we have worked with previously and are negotiating firmly to secure an excellent deal for them.
“Our investor clients in particular are often comfortable to buy sight unseen or on the basis of a video, so while virtual viewings are not a market-wide panacea they can be helpful,” she says.
One of the biggest hurdles was with mortgage lending. At first, many lenders removed products and hugely restricted their capacity. Now, however, we are seeing a revival. Products are becoming available again for borrowers, and many lenders are now incorporating more online and digital processes, including online mortgage valuations. As such, the market has plenty of options available to those who are keen to secure borrowing.
The UK housing market got off to a strong start in 2020. With Brexit finally at least partly resolved, the “Boris bounce” was truly underway. The mortgage market was more competitive than ever, house prices were strong and rental demand was high. This means the UK property sector was already well-placed to deal with the ensuing coronavirus crisis.
According to Alpa Bhakta, CEO of Butterfield Mortgages, most organisations and investors are already adapting to the new climate. She urges people to be cautious of “worst-case scenario” predictions.
“CEBR recently announced that house prices in the UK will fall by 13% by the end of 2020 as a consequence of Covid-19,” she says.
“Of course, there is a natural propensity for forecasts to take into account worst-case scenarios. We received similar projections in the lead-up to the 2016 EU referendum. One month before the vote took place, HMRC warned that house prices would drop by at least 10% should the UK vote for Brexit, and as much as 20% two years following the vote.
“Evidently, this proved not to be the case, showing why we should be critical when assessing how certain future events will affect demand for real estate. This is also true when we consider how different sectors of the market are performing.”
She adds that, despite the current situation, Savills‘ five-year projections still show a 15% house price rise by 2024. This is for the UK property market as a whole, and certain locations have even higher forecasts. The north of England and Midlands, for example, are particularly promising locations right now.
Investing in bricks and mortar, particularly in the UK property market, is one of the top investment routes for many investors. Considerably less volatile than stock markets, many investors also prefer to have a physical asset. Return on investment comes from both rental income and capital appreciation. While property prices can go up as well as down, successful investors tend to take a long-term view.
Like Alpa Bhakta, Jan Vecerka, chief executive and founder of BrikkApp believes we can use past evidence to guide future predictions.
“SARS and H1N1 both caused short-term volatility in the real estate market, but the market stabilised within three to six months in each case. Even in disaster scenarios such as the current one, real estate remains relatively stable and will continue to be one of the best places to invest in.”
He reiterates the fact that property remains “one of the safest forms of investment during these difficult times”.
He adds: “Crisis changes things: With every crisis, society shifts to become more productive. This is the same within any industry. Economic crises tend to have long-lasting effects on the way people approach decision-making.”