The United Kingdom faced uncertain times during Brexit and the impact it would have on property prices and mortgages, and now we are facing additional uncertainty with the Coronavirus pandemic.
So what can we expect from the UK property market as lockdown measures start to lift and we adjust to the new changes, and is it still worth investing?
Just over ten years ago, back in 2008, we experienced a housing market crash due to the global financial crisis where UK property's value fell by 20 per cent. While it's too early to predict the impact Coronavirus will have on house prices, it's expected that the property market will follow a similar pattern to the previous crash. Property prices may stand still for a while but should increase again when levels of certainty return to the market. Read on as we explore the current situation, as well as how investors can purchase effectively in a post-covid world.
The Current Situation
Where we stand at the moment, it is inevitable that a recession is coming. This is assumed due to the 25% fall in the stock market, the rising level of unemployment (that will only increase after the furlough period) and the unprecedented fall in UK's GDP which is ten times worse than any previous drop, according to the Office for National Statistics.
The economy took a turn for the worst as businesses closed and workers were sent home from restaurants, shops and offices as a result of the Covid-19 outbreak. It's more challenging to predict when the economy will recover, but for the property market, this sector seems pretty stable for the time being.
People are taking advantage of below market value prices, low mortgage rates and the high returns on investment that they should make in the long-run. Now lockdown restrictions have been relaxed, construction and development plans are well underway, and socially distanced and virtual viewings are all in place. Buyers with agreed sales before the pandemic are able to move forward with their purchases.
Post Covid-19
The shape of the property market remains unknown, but we do have previous crashes to help us predict how it will all pan out, providing Coronavirus doesn’t have some form of relapse. So both homebuyers and professional property investors may be sceptical and wait to see if the predictions are true, but of course, different types of buyers will look at things differently.
Factors like affordability, for example, will be considered in a very different way by homebuyers, concerned about the impact of Covid-19 on the jobs market, and where they are with their personal finances, compared to professional investors, who will see this as an opportunity to capitalise from others who can no longer afford to keep their homes. Needless to say, the state of unemployment and the overall health of the economy post-Covid-19 will be a major determining factor.
Where to Invest in the Future?
As the uncertainty on whether people will be able to afford to invest in a house or continue with payments on their homes goes on, this should put buy to let properties in high demand for the future, as there is less risk involved when renting a property. For investors who are familiar with profiting from buy to let properties, however, it's worth noting that there may be some limitations or additional requirements in the future. Living in proximity is no longer an option for the time being, and outdoor spaces and gardens are becoming highly sought after. Not to mention the levels of hygiene that will need to be considered when letting a property.
As remote working is at an all-time high, tenants and landlords will be looking to improve the standards of their home, so you could start looking at some property investment companies such as RWinvest who have modern developments on offer for some inspiration. Any properties with shared bathrooms and communal spaces will also have to be taken into account, in case any changes need to be made to existing or future properties. Professionals in all sectors, not just the housing market, should keep up to date with government information to see how they can move forward with their investments in a safe way for both themselves and their tenants.