We understand many people are putting off buying property now. Perhaps you were considering a property investment but could not go on a viewing because of social distancing measures, or perhaps you are unsure of when the market will pick up again?
Figures released in May from Rightmove suggest things might be picking up again, so is it an ideal time to invest?
Even though the housing market has just opened again, a record number of home buyers and renters are looking to move, resulting in a record 6 million visits to Rightmove on the 27th May. The surge in visitors can be explained in many ways, such as the “lockdown effect” which has resulted in pent up demand from those willing but unable to move. Whilst being in lockdown, many have also begun to evaluate their lifestyle, including where they live. Many have decided upon quieter areas or towns where they can get more living space for their money. That goes some way to explaining why Rightmove have reported that quieter area such as Devon and Cornwall experienced a surge in interest, as well as commuter towns such as Canterbury where property prices are considerably cheaper than in London. In contrast, the capital cities of London, Belfast, Cardiff, and Edinburgh all experienced a decline in interested buyers.
Throughout March and April, property prices fell. We feel that a few factors have caused the decrease in property values. Firstly, estate agents were closed due to government lockdown restrictions, so they were unable to conduct physical viewings. This led to a decrease in demand for property as many knew it would be some months until offices would reopen and physical viewings would resume. Much of the UK’s workforce was placed on furlough, and uncertainty of income would have influenced some house buying decisions. It also appears that those who had to urgently sell during lockdown offered discounts to entice the smaller pool of buyers who were still motivated. According to Halifax, house prices dipped by 0.6% in April compared to March but experienced a more modest fall in May of 0.2%. This suggests that the market is regaining some certainty. As lockdown eases and the demand increases, prices in turn will begin to rise.
The fundamentals of UK property investment are the same. Prices hinge on demand, and as there is a gap between the number of houses being built vs the number of people who need accommodation, available housing is always going to attract a higher price. Zoopla has already reported an 88% increase in demand as the property market reopens, overtaking that seen in March before lockdown. The number of sales agreed is also steadily rising, but this will take some time to fully recover as viewings were not carried out in April or the beginning of May.
This lockdown period has caused people to evaluate their homes and living conditions. As working from home will inevitably become commonplace once lockdown has been lifted, people are considering other key towns and cities outside of London where they can get better value for their money. If you are looking to invest in property you should consider commuter towns like Luton and other key cities where property is less expensive. As prices are currently low, it is a good time to consider investing as they will not stay down forever.
If you require any further guidance on the property market, contact one of our investment consultants who will be happy to assist. You might also want to read more on how the Coronavirus pandemic will affect the UK’s property market and our comparison of London commuter towns.
Interested in investment property news?
Sign up to our newsletter and keep up to date on the latest property news and investment opportunities.