Coronavirus epidemic rocked the world. Its effect was observable at its initial phase, but as the time has passed and WHO has declared it as a pandemic, it’s shown its worst effects on all aspect of the world. Governments imposed lockdowns to contain the spread of this deadly virus has influenced the economy badly.
The property market worldwide was not able to escape from its own effect. Nevertheless, experts are considering this as a temporary setback, as post COVID-19 analysis results appear to be promising and strong according to experts. It’s considered in the short term we will witness a dip into property transactionsbut property investments will remain rewarding and promising in the long run.
Corona Effect on London Property Market
The London property market also has not been spared from its effect. Before the outbreak of Coronavirus, the London property market was on its recovery path and we have seen the increase in London’s property prices which was the effect of certainty in Brexit and political stability followed by the conclusive results of the UK election. The real estate agents have reported higher inquiry levels.
The real estate market uncertainty is causing concerns and increasing levels of debate. The methodology and therefore the accuracy of real estate valuations are being challenged. The property market is considered in trouble state and a significant slowdown in market activity is causing increasing levels of volatility in the London property market.
Tomer Aboody, Director of Property Lender MT Finance, warns that despite the strong start to 2020, the coronavirus is a threat, adding “with the possible pandemic of the coronavirus hitting the financial markets, this could have an impact on all-important property confidence.”
As per the research conducted by the London-based estate agency, Benham & Reeves found that on the whole buyers and sellers are returning to the market in confidence, with 83% of those surveyed responding that they intend to continue with planned home sales or purchases this year despite the virus.
The property consultancy Knight Frank said the 38% drop in the number of house sales in 2020 would have a ripple effect across the property industry, hitting retailers, removal companies, and even government coffers. The property market has already seen a 40% fall in the number of homes listed for sales and net worth also down. There were several reports of big-ticket international transactions falling through over the weekend, with overseas clients backing out of sales.
“We have heard of people pulling out of deals because of the stock market collapse,” said Mr. Alvarado. “One large penthouse was on with another agent for £50 million but the buyer has just pulled out because on paper he has taken a huge hit.”
The outlook of the London Property Market
The real estate market is always considered that the recession can potentially be a golden period for investors with ample opportunities in the market to reap the higher yields from cheaper quality homes. In recession times stocks are seen crashing down and people try to pull out their money from stocks and start finding safer options for investment.
Real Estate Investment caters to a variety of investor needs, including diversification and income generation. So it’s important to understand the value of property investments in a portfolio during the time of uncertainty.
Economic slowdown offers you an opportunity to invest in the property market rather than shy away from it.
A recession can be the best time to invest in real estate, says Jim Egan, head of commercial real estate banking and senior vice president at Bryn Mawr Trust.
The expert believes that this is a great time to invest in the market. Investment is always considered as tricky business and it may also pay well. Many investors consider pulling out their money from the stock market and consider investing in the property market as the property market is always considered as safe option to invest.Obviously, buyers are afraid to invest with so much uncertainty swirling around the world but major incentives to kick start the property market will come sooner rather than later. Now could well be the time to consider buying.
London property is still being considered as ‘safe haven’ of sorts. International investors are still looking for the London propertymarket as an investment option with some reporting blind bids and sales achieved after video tours alone.
Tim Macpherson, head of London residential sales at Carter Jonas said: “While activity has slowed significantly, our pipeline of sales is holding well. And while stocks and shares investments have taken a blow, the property is often a safe haven.
Knight Frank forecast that London house prices will jump six percent in 2021, while Chestertons said it expected to see the growth of three to four percent in central London next year.
Savills was more optimistic about the years ahead. The estate agent’s analysts say mid-term price growth will be an average of 15 percent over the next five years, with prime central London leading the recovery.
Nationwide has predicted that the economic measures put in place by the government during the coronavirus pandemic could help UK house prices rebound sharply after the crisis has passed.
The above outlook regarding London property gives confidence to investors to invest in the property market for higher yields.
One Investments Property Consultant
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