Almas Uddin
Founder and Mortgage Advisor
17 May 2020
With dips in house prices following the Covid-19 pandemic, we are receiving lots of enquiries for advice about when to invest.
Let's take a look at how the outbreak has impacted the housing market, and what the future has in store!
Covid-19 And The UK Housing Market
Nationwide reported annual growth in housing prices of 3.7% in April. This increase was the highest annual growth rate the UK had seen in over two years.
In April, we saw monthly growth over a seven-month consecutive period, so it is clear that before lockdown, the property market was in a climate of rapid, sustained growth.
However, with lockdown implications, the property market stalled, and homebuyers delayed their moves.
These postponements made it difficult for lenders to calculate how house prices were changing. However, we know that property values started to drop quickly. Now, as the market resumes, we can see how those trends are changing, and what opportunities this presents.
Zoopla report that there are around £82 billion of property purchases in limbo, waiting to complete when regular trading resumes. The value of investments on hold works out as about 400,000 properties and shows that March sales volumes were around 10% of usual figures.
Nobody can yet be sure about how long house prices will remain low for, but we know it won't last forever!
Predicting Housing Market Growth
The Coronavirus outbreak is something new, and so it is impossible to be sure about the longer-term impact on the economy. What is certain is that restrictions on movements have postponed large numbers of purchases.
Savills estimate that house prices will fall in 2020, and recover by around 5% in 2021.
Rightmove reports that new properties coming up for sale have dropped in value by around 0.2% to an average of £311,950. This dip contrasted with April 2019 when prices had increased by 2.1%.
In the rental market, Zoopla reports that demand is fast recovering. The 57% drop in rental demand has already improved by 30% in just the first two weeks of April. It seems likely that rental demand will continue to be high, and continue to grow.
Nationwide predicts that government measures to protect the economy will also help aid a quick return to standard trading patterns. Support to safeguard jobs and businesses, and reductions in interest rates to reduce the cost of borrowing leave the economy primed for a fast bounce back.
The Rental Market After Coronavirus
Landlords are looking ahead to strategise effectively for adding new properties to their portfolios. While house prices have dropped, we anticipate this being short-term, so any new investments will ideally happen before prices begin to grow again.
With rental prices expected to grow this year, and again by 5% next year, there is strong potential for a return on investment being much higher than that available through savings interest.
Mortgage lenders are also offering incredible rates and deals to attract new customers, which will not last long.
Why Now Is An Ideal Time To Buy
Lots of property buyers are delaying house moves due to the disruption in work, family life and being able to travel. These delays mean that it is a buyers market, with lenders competing to offer the most attractive deals to snag those fewer potential customers.
Vendors who have had a property on the market for a long time are quickly dropping prices to attract a faster sale, and low-interest rates are combining to offer the perfect recipe for lucrative investments.
Working with a professional mortgage broker is essential to take full advantage of those deals, and to achieve a fast turnaround on your application before prices start to rise, and lending offers become less competitive.
The trick is to get ahead of the market while it is in a lull, and before the majority of buyers proceed with their plans!
Coronavirus Frequently Asked Questions
How can I find the best mortgage rates for a new buy-to-let investment?
Revolution Finance Brokers have exclusive deals available and work diligently with our buy-to-let clients to provide first access to opportunities to extend their portfolios in the most investment-savvy way.
If you are considering purchasing multiple investments or buying one buy-to-let property, give us a call on 0330 304 3040, and we will ensure you have access to the best deals on the market.
I know now is the perfect time to buy, but what can I do if I don't have the budget?
Lower house prices make this an ideal climate to purchase a property. If you already have a mortgage then give us a call, and we will use our professional calculators to check what sort of equity you might be able to release from your property or your portfolio.
If you currently have a fixed-term mortgage, you might be able to make significant savings on interest rates even if you need to pay an early settlement charge. Don't worry - we can work that out for you!
Can I make my first property investment now?
You sure can! Give Revolution Finance Brokers a call or drop us an email. Our specialist mortgage advisors can help you work out the best options and the most cost-effective mortgage deals to get you started.
Can I review my property portfolio now?
Now is a great time to take stock! Revolution Finance Brokers work with landlords and buy-to-let investors large and small.
Get in touch, and we will help you to review your portfolio and costs, and recommend the best ways to start making immediate savings.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.
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