The UK Market:
London continues to struggle partly due to workers now looking for properties outside the capital to avoid costly commuting fees following new work-from-home policies. Whilst London’s market has been open for a number of weeks property sales remain 24.8% lower than just before lockdown.
Both North West and South West UK property markets are also struggling at 0.9% and 1.7% respectively below pre-lockdown levels.
Property giant Rightmove recently reported a huge up-tick in recent searches for countryside homes with good ‘out of city’ transport links, capable of facilitating the new hybrid home/office approach to work, at least until things return to normal.
Market fluctuations;
Rightmove reported that in the last week a mere 11,000 properties were listed on their site, a 65% drop since the previous year at the same time, and with Zoopla reporting 41% of homeowners now hitting pause on their selling plans.
Knight Frank recently forecasted house prices would drop by 3% this year but then climb by 5% for 2021. Depending on how the global pandemic resolves, Savills have given two separate predictions; the first forecasts a 5% drop in prices this year and a 5% rise in 2021, while the second forecasts a 10% fall this year and a 4% rise in 2021.
The Lloyds Banking Group (an umbrella group that includes the Bank of Scotland and Halifax) predict a 5% fall but then predicts a recovery by 2% in 2021.
Buying and Selling;
Due to current market uncertainty, offering below the asking price on a property right now could very well yield a better overall deal, due to nervous sellers concerned with keeping properties on the markets during an uncertain time.
If you’re currently planning on selling your home, house prices may well fall in the remainder of 2020 so be prepared for an initial lag on the time it takes to see a return on your investment.
Property Viewings:
As we come out of lockdown, house viewings will off course proceed with caution. Online viewings, for obvious reasons, remain the easiest and safest way to check out that new place you’ve had your eye on, with face to face viewings reserved for the more serious applicant.
A new innovation we’ve began to build is Virtual World viewings, a clever way to view each room from any angle in a full 360 degree space. To see what we mean, check out one of our latest properties, 37a Lytton Road here.
Mortgage Deals:
Since the advent of lockdown, mortgage deals have been cut by 50% but still remain available especially with healthier initial deposits on offer. Around 9 out of 10 mortgages with low upfront deposits have in recent months fallen by the wayside with the 5-10% deposit mortgages sustaining heavy hits.
However as markets increase in confidence and physical property viewings become more prolific this temporary trend should fizzle out.
To learn more click here.
Commercial Property:
In the commercial property sector, the UK’s high streets paint a rather darker picture. "Retail [in the UK] has had problems for ages”…“at the moment incomes are obviously being hit by furloughs, and then there will be a squeeze on spending in a recession” said Prof Michael White, an expert in real estate economics, at Nottingham Trent University.
In essence Coronavirus pandemic has accelerated the growth of a cloud thats been forming slowly over the UK high streets since the late nineties…online shopping. Lockdown has forced an entire audience through the arches of the online giants like Amazon and Ebay whilst simultaneously hitting non digital services like cafes, corner shops and salons with force.
Due to many high street business owners struggling to pay rent the resultant rise in arrears could lead to a 20-30% fall in the capital value of many retails properties, believes Prof Andrew Baum, who leads the Future of Real Estate Initiative at Oxford University's Business School.
Advice for Landlords:
During this crazy time of social distancing and a looming extension to lockdown on the horizon, landlords need to make sure their eyes are firmly on the ball.
Take a look at the new Minimum Energy Efficiency Standard (MEES) introduced this April. MEES now applies to all private lets preventing any property with an F or G energy rating (with a fine liability for up to £4,000 should you try).
Also make sure you understand the changes to tax relief made as society was adjusting to lockdown. Landlords can now not deduct mortgage interest from rental income before calculating tax. Instead, a 20% credit on mortgage interest payments will be applied by government automatically.
Also consider new trends that you could leverage when selling a property. With a new work from home approach being tentatively explored by society, sunny courtyards large living rooms are real winners, as are home offices and studies.
Remember, exploit as many new trends and work/life patterns you feel comfortable with, society is adjusting to a new norm and what better place to do that from than home itself.
