what’s next for the property market?
It’s been a busy 18 months for the property market. While fears of a post-stamp duty holiday price crash remain unfounded, there is still uncertainty – and plenty of speculation – about what will happen next. Our Commercial Director Gareth Lewis offers his thoughts on what may fuel demand, predictions for the next quarter and why bridging lenders must always be relevant.
what do you think will fuel the demand for property – and subsequently bridging finance – in the new year?
A lot of the property market this year has been fuelled by the stamp duty holiday deadline and people’s desire to create a more useable living space. Therefore, it’s being fuelled more by homeowners than property investors. That’s why the regulated sector has been exceptionally buoyant over the last 18 months, because there’s a demand to get a chain transaction completed quickly or borrowers were looking to buy the right home that supports their family, or their retirement.
What we haven’t had for a long time is the stimulus of your stereotypical investment assets going on the market. This is mainly due to the ramifications of the pandemic, with tenants staying in properties for longer and the eviction moratorium more than likely fuelling the lack of supply. So, landlords were left in limbo, where typically they would have been putting those rental properties on the market to be sold, or first-time landlords would be entering the rental sector, there was no stimulus for new investment property going on the market.
As we come further out of the pandemic, I believe more and more property investors will look to rejig their portfolios, possibly placing properties on the market, maybe via auction, as there might also be an element of distressed sales coming through. This will in turn open up new opportunities for investors to purchase property, enabling them to take advantage of current price growth and the low interest rates.
However, with the Bank of England base rate expected to increase in the coming months it is likely that we will see this increase being passed on to the investor with higher mortgage rates and payments. So, I think property investors will continue to get themselves fixed for a period at a low rate whilst they grow their portfolios from a capital appreciation point of view as well. We’ve certainly started to see an increase in demand from property investors over the last few months, and property investors will continually look for opportunity well into the New Year.
what are your predictions for the bridging finance industry over the next quarter?
There is currently a lot of opportunity within the refurb and conversions space, mainly due to demand for more space and the softening around permitted development. However, there is a lack of supply for consumables since Brexit- overinflating costs of materials, which has led to a lot of uncertainty around whether those projects can be done for the prices being quoted. I would suggest lenders will be cautious when reviewing these types of transactions to ensure the profits made are suitable; the transactions are sustainable throughout the project.
On the whole, while we continue to see a large amount of liquidity in the market, I think you’ll continue to see changes to products on both a pricing and leverage perspective over the coming months. The bridging finance sector is very reactive, so when consumer demand dictates, you will see product shifts from that perspective. For example, if suddenly tomorrow we were inundated with auction purchases because the auction market was stimulated, you’ll see shifts in product changes to support that transactional flow better. Generally, there’s a lot of competition, with every lender currently trying to find their own space and trying to stimulate business volumes.
do you think there will be a shift in borrowers’ behaviour and the bridging loans they need?
Probably not. Bridging is about capitalising on an opportunity. So, behaviour will be wherever opportunity lies. Borrowers will always need to have that flexibility, commerciality, and common sense-based approach to their requirements.
in your opinion, what is the biggest challenge currently facing the industry?
The property supply thing is a big issue. Whilst there’s a continued heightened demand and lack of supply in the owner-occupied space, you’ll see many getting gazumped or having to pay over the odds for property which then means that if you’re looking at a property from an investment perspective, you’re going to struggle to get the deal that you want out of it.
We desperately need more property coming in to stimulate opportunity for first time buyers and for property investors.
what’s next for MT Finance?
We’re always looking to evolve, be the best version of ourselves. So, we continue listen to our brokers and our introducers to make sure that we’ve got a relevant product proposition in order to support their clients better.
If you’d like more information on how a bridging loan could help secure your next property purchase, our team of dedicated professionals can be contacted here, via phone on 02030512331, or on email, using enquiries@mt-finance.com.