Preparing for a Post COVID-19 Property Buying Environment
It’s clear that COVID-19, the condition caused by the strain of coronavirus that is at the heart of the current pandemic, will have a considerable effect on the world’s economy for some time to come.
Much UK industry has already ground to a halt – and, while the focus, for now, is upon slowing the spread of the virus and keeping UK residents safe, we will soon need to consider the long-term effects of these momentous changes.
If prior to the COVID-19 outbreak, you were making plans regarding property investment, it’s likely that those plans will currently be on hold.
Like many others, you’ll probably want to hit the ground running once activity in the property sector picks up once more – so the team at Property Solvers have put together this guide to help you prepare for that time.
So, what is the current status of the market and what is likely to happen post-COVID-19?
The market as it stands
The last few days of March saw the government urging mortgage lenders, estate agents and other property specialists to suspend all transactions and processes as part of the move to combat COVID-19.
As a result, almost all of the property sales and purchases currently in progress have been suspended for the foreseeable future. Viewings have been cancelled wherever possible, and the government has encouraged mortgage lenders to extend their existing offers for up to three months.
Because of this, many property chains will remain frozen in place, while others will have collapsed as the result of individuals and businesses pulling out through uncertainty.
Only around a fifth of construction companies have suspended their activities at the present time, so some building projects have been able to continue. However, it’s difficult to know how much longer this will be permitted.
Possible outcomes of the COVID-19 “lockdown”
A significant decline in property values seems inevitable, with some experts predicting a drop of more than 10%.
While the current situation is considered a freeze and not a typical “crash”, there is no way of avoiding the fact that the market will be impacted.
The UK government predicts that it will be around six months until the country returns to “normal”, but it isn’t entirely clear what that means.
Even after the worst of the pandemic is thought to be over, it is unlikely that restrictions will be lifted all at once, as not only might this may herald a second outbreak, but it could also overload processes that are only just restarting.
There is no telling precisely when it will be deemed safe for property companies to begin doing business once more. However, it is worth noting that the majority of transactions, sales, purchases and projects have not been cancelled outright but simply put “on hold”. This means that there is a possibility for the market to pick up relatively quickly after businesses are given the all-clear to start trading again.
Indeed, with many workers furloughed and individuals under “lockdown” at home, many UK citizens and business owners will now have the time to consider their next moves. This could involve the purchase of new property or premises as they seek to rebuild their lives and reinvent their companies.
If prices do drop as we combat the virus, it is possible that the market will see a boom as prospective buyers seek to take advantage once the sector gets up and running again. Interest rates are currently low too (and dropped to historic lows in response to the crisis) which may encourage more to apply for mortgages.
Of course, the other side of this argument is that many UK workers have been made redundant as the result of the pressure applied by the government for businesses to cease any “non-essential” activities. This means that earnings have dropped significantly in some areas.
It is likely that this will also impact the property market, as surges of unemployment tend to result in slumps as fewer individuals are in the position to buy.
What this means for the market – and how to prepare
Following the general election of December 2019, the property market seemed on its way towards a period of relative boom.
However, the property sector was still far from its strongest when COVID-19 came to the fore. While its current state is apparently one of “stasis” rather than “slump”, it is hard to predict the changes that are to come.
If you’re partway through a property deal – or have been planning to purchase or sell property in the near future – the best approach is to keep a close eye on the market and adjust your plans accordingly. Be sensible with your finances and make careful judgements based on your current position and how it may change as the global situation progresses.
The best possible outcome is that, once the end of the pandemic appears to be in sight, property companies, buyers and sellers will be prepared to pick up exactly where they left off.
There is, of course, the likelihood of confusion as the government determines how and when to lift the freezes on certain industries. It is also possible that the market will hit a slump as the result of a rise in unemployment and the suspension of lending.
However, if interest rates remain low once lending restarts, individuals and businesses may feel encouraged to pursue their property transactions almost as soon as the freeze is lifted.
Above, all stay safe and take care...
Keep calm and carry on ... staging
Interesting article. You are right there is no certainty on the future - however, what we know is that life will go on , so we should prepare now and be ready for when this comes.
Even at this difficult time, there's lots we can be doing at home.
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