covid-19 hits prices but prospects far from gloomy 

With lockdown in full force for the past six weeks, it is not surprising to see the trend in house prices and transactions on a downwards path. Indeed, the latest Halifax house price index reports a 0.6 per cent fall in values in April, compared to March, the biggest monthly fall in two years. However, despite the pandemic creating a near total shutdown of the market, it is encouraging to see prices still up 2.7 per cent on the same month last year.

lenders return to the market

With fewer transactions due to valuers being in lockdown and lenders shifting their attention to granting mortgage payment holidays to struggling borrowers, the fall in prices is likely to continue into May and possibly June. But hopefully the easing of lockdown, when it comes, will mean a rise in transaction volumes and indeed prices. We should not forget that lenders remain extremely liquid and keen to lend, with products which were pulled just a few weeks ago already back in the market.

Once valuers are able to visit properties again and banks can complete their pipeline of transactions, the picture should start to look rosier. That said, the first few months after lockdown is eased will be an adjustment period. This will impact property values, particularly as some potential buyers will be affected by job losses. But as hard as it is to predict prices in the future, looking at the robust position of lenders – all extremely liquid and looking to lend – we believe prices should return to current levels by around early first quarter of 2021.

The position of the banks, along with what stimulus the government will surely provide, should mean a more stable housing market next year. A possible stamp duty holiday for homebuyers has been mentioned, and this would have a huge positive impact on the market as a whole, since high levels of stamp duty is really what has stalled it over the past few years.

Higher-end values in London, along with higher-valued assets nationally, will be impacted in the long run and will take time to come back to current levels. But one should remember that these levels are still higher than they were when the financial crisis hit in 2008. Even then, while the banks’ infrastructure and liquidity were hugely challenged and there was no stability at all, the market quickly bounced back. This should give us even more confidence for the forthcoming 12 to 18 months.

how MT Finance could help

If you are a property investor and need to complete a transaction very quickly, a bridging loan from MT Finance could help.

A bridging loan is a short term loan that can be secured against a property and is designed to “bridge the gap” and access funds quickly, giving you the time and space needed until longer term finance can be arranged or the security is sold. If you would like to discuss your property requirements, do get in touch by calling us on 0203 051 2331 or fill in our contact form and someone will call you shortly.

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