Almas Uddin
Founder and Mortgage Advisor
02 Jun 2020
Highest House Price Falls For 11 Years
Figures released by Nationwide show the highest drop in monthly house prices experienced in the UK for 11 years. This dip represents a 1.7% month on month drop.
Annual growth in market prices has fallen by 50% from 3.7% to 1.8%, owing to the impact of the Coronavirus lockdown.
HMRC has also released information showing that transactions relating to residential properties fell by 53% in April when compared with the year before.
As prices continue to fall, there are immediate opportunities for savvy investors to seize the chance to add to their property portfolios at sale prices, and interest rates, not seen before for over a decade.
The UK Property Market Rebound
While the market is widely predicted to bounce back, this current trend demonstrates how the property market remains firmly in the buyer's interests.
The monthly dip in house price indexes in May 2020 is the most significant month-by-month decrease since early 2009 and may be indicative of continued price drops. However, there is much uncertainly about when the rebound will begin.
When it does, it is likely to be very fast, and fall in line with returning confidence, fewer restrictions on travel and house moves, and renewed demand.
How Covid-19 has Impacted the UK Housing Market
Before the pandemic, the housing market had continued to enjoy steady growth, with gradual increases in both transaction volumes and property values.
The upward trend corresponds to relatively low-interest rates, less political uncertainty and a stable employment climate.
Massive changes in our lifestyles, such as social distancing, would inevitably impact the market. However, with mortgage holidays and repayment freezes, the measures in place to mitigate the impact and reduce the economic fall-out are beginning to take hold.
Stalled House Moves
One of the most significant factors in the fall in house prices is the restriction on moving. Nationwide research indicates that up to one in eight house movers had decided to delay their move until lockdown was over.
It should be noted that lockdown is already beginning to lift gradually, and at some point, those pending moves will resume, probably apace!
Most property owners or homebuyers regard the lockdown as a short-term delay, with the majority of buyers anticipating an average six month lag in their plans.
This may prove to be extremely lucrative, and if house prices continue to dip there will be opportunities to invest and to get onto the property ladder at rates that would have seemed inconceivable before lockdown began in March.
Property Bounce Back - The First Signs?
As we drill down into the dips in house values, the market is beginning to come to life again as restrictions are eased. Property viewings were allowed to resume from 13th May, and since then, as confidence returns, more homebuyers and investors are picking up their investment plans.
While we have previously predicted a quick bounce back this is now supported by more real-time data. Google daily searches on the three most popular UK property sites had been down by 50% in April. Now they have returned to volumes of only 13% below the levels experienced before lockdown began.
Many homeowners have been able to take advantage of mortgage holidays, and the lending market has quietened down in line with drops in purchase levels.
In April, 15,848 mortgage applications were approved. This level sits at a significant 80% less than levels in February, according to the Bank of England. Indeed, this level of new mortgage applications was at the lowest rate since the index began in 1993.
These application statistics are now beginning to grow, with applications throughout the month reaching 34,400, representing a level 34% down from February - a return to previous volumes of 46%.
Financial Support for Borrowing During Covid-19
The Financial Conduct Authority has confirmed that homeowners struggling to keep up with their mortgage repayments can maintain a mortgage holiday period for an extended three-month period, or make reduced repayments.
Homeowners who have yet to apply for a mortgage holiday can do so until 31st October, and lenders remain unable to repossess homes until the end of that month.
These measures are intended to assist homeowners with accessing lending and coping with the impacts of lockdown on their jobs and businesses.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.
Should you need advice or assistance with accessing affordable lending, obtaining funding to enable you to invest in the property market while prices remain low, or help with remortgaging to take up the competitive rates on the market, give Revolution Finance Brokers a call today!
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