IS THIS THE TIME to try to swap the shackles of rent for the bonds of mortgage? As we ponder life after the coronavirus crisis, some of us are also wondering whether it has made rental or even ownership more affordable.
Prices fell faster last month than any time in the last decade a survey reveals. Lender Nationwide notes that the cost of a home in the UK last month May 2020 fell by an average £4,000 —1.7% — when the housing market was in effect closed.
Since the Government allowed it to reopen on 13 May 2020 estate agents say there has been a surge in enquiries. Buyer demand in England is reported to have gone up by 88% in the first week. But, said David Westgate, chief of Andrews Property Group: “It will be 2021 before the property market finally gets into its stride again.”
Property portal Rightmove said that in London 6,496 new properties were listed for rent — 59% up on the previous week — and 1,165 new properties were offered for sale — 206 per cent up on the previous week.
Does this suggest, given the new recognition for working from home, a desire among Londoners to move to the countryside, if not a desperation to sell quickly? Perhaps not: the agency Hamptons told a Which? Money podcast that the chance of getting a bargain “is absolutely not the case” because not many properties are coming to market.”
Some banks see price falls. Lloyds bank believes house prices could drop 30% over the next three years.
Forecaster PropCast thinks that when furlough money runs out demand will die, leading to “a big crash” within 24 months.
An opportunity, a time window in which to buy before prices rise again? But caution, you still have to raise a big deposit. A first-time London buyer has to find £71,635 to get an 85 per cent loan-to-value mortgage. And the future of many jobs is uncertain as employers struggle to recover from the disease that swept out of China and across the world
Happily, banks are, says property lender MT Finance, “eager to lend” and interest rates are at an all-time low. Colby Short, founder of estate-agency comparator GetAgent.co.uk, commented that sellers were “unlikely” to budge on asking prices.
Marc von Grundherr, director of Benham and Reeves, which has branches in Shoreditch, Wapping, the Isle of Dogs and other London districts, was enthusiastic about growth prospects, saying: “The property market is still very much finding its feet… However, the fundamentals remain steadfast and it’s clear that the market has returned with a bang over recent weeks.”
Greg Corin, of Spitalfields, City-based property firm Belchak Corin, said: “A handful of cash buyers interested in taking advantage of Hackney’s green space and buoyant amenities should inject confidence in the market… we predict a strong bounce back in 2021 to pre-Covid-19 prices.”
So whether you are optimistic or pessimistic about your chances of buying may depend on which prediction you think more likely. Hackney still seems a great bet because of many factors, including its excellent transport links and semi-segregated cycle routes to both the West End and City and has been a great investment for boomers. Some of them were able to benefit from a rise of more than 700% over two decades (don’t ya hate ‘em?)*. As the table at right shows, the borough still looks a good investment. And don’t laugh, but you might even consider the “new Barcelona”.
David Altheer 110620
* In August 2018 the Evening Standard property section noted that prices in Hackney had risen over two decades by 753%. The “hipster hub”, as reporter David Spittles termed the borough, had experienced the greatest rise in England, nearly twice the London average. Before you put all your savings into Hackney, remember that what goes up…
* All pictures on this page © David.Altheer@gmail.com, and all for sale for reproduction. Most photographs are available in bigger formats.
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