At the turn of the year, property was a hot commodity. The industry was off to a flying start with many choosing to invest in property as a result of both the UK clarifying its position with the EU and the unanimous win by the Conservative Government and subsequent ‘Boris Bounce’. 

However, progress came to a halt in the wake of COVID-19. Whilst several transactions did go through that were mostly complete, with estate agents closing, a ‘freezing’ of the market and a withdrawal of most mortgage products resulted in activity in the market plummeting.

The good news is that the rate of infection appears to be slowing, numbers of active cases are falling, and the Government are making every effort to reignite activity in the market. The result is that we appear to be seeing the early signs of a market recovery.

Activity is on the up

Nationwide’s July house price index remarkably showed a 1.5 percent year-on-year increase in house prices, with a recent report by Rightmove supporting this growth, showing a 75 percent increase in buyer enquiries during the same month.

The big question, of course, is whether this growth is sustainable considering the negative state of the wider economy. Many are conflicted on this matter; will we see a second fall in prices? Will we begin to see the level of activity before lockdown return, or will it be somewhere in-between?

Of course, no one can predict this with certainty. Confidence will play a key part however, with investors being key to stimulating activity in the market, without hesitation of another market crash outside of their control.

Will demand return?

To predict whether demand will return to the market, it is worth looking at the trends in the property market before the lockdown came into place.

Brexit uncertainty was having a suppressing effect on the market, with domestic and international buyers cautious of how the housing market would fair with the UK leaving the EU. Large investments, property or otherwise, were on hold.

However, as Boris Johnson secured a confident victory in the December 2019 election, after years of falling house prices, we saw the highest rate of house price growth in over three years. With some clarity established, much of the pent-up demand was released into the market.

So, with COVID-19 cases now falling, we feel that investors and other buyers could begin to purchase.

Investors are seeking certainty

Whilst the economic recovery witnessed as a result of Brexit uncertainty was rapid, it is unlikely the recovery will be as quick this time around. The effect of COVID-19 has unfortunately been far more impactful, with the effects of a variety of factors, unemployment included, likely to have longer lasting effects.

Recent signs suggest that a recovery may be faster than many feared though. Thinking optimistically, with cases falling and incentives being introduced by the Government, most notably the stamp duty holiday, sales have been increasing and we see little reason as to why this will change in the immediate future with many of the financial benefits phasing out next year.

With sales increasing, investors see this as a sign of confidence to invest. Whilst 43 percent of investors from our recent survey stated that they were not planning on making an investment until COVID-19 had been ‘contained’, will a proportion of these investors see the current decline in cases as an opportunity?

With progressive containment and occasional local lockdowns being introduced so far proving successful, we feel investors will continue to trickle back into the market, maintaining consistent growth over the coming year.

Is it time to invest in property?

Whilst property experts have re-evaluated short-term forecasts for the market, long term projections for the property market remain healthy. Property giant Savills are so confident of a property recovery in fact that they are forecasting a 15 percent rise in house prices by 2024.

UK property is known for its ability to weather most economic downturns and bounce back quickly when compared to other investment assets.

Whilst a second spike in cases would undoubtedly be disastrous for the market, as it stands, there is reason to be optimistic over the long-term health of the market, with savvy investors continuing to seek property ‘bargains’ in the current market.

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