- 31st March 2020
- Posted by: DMM
- Category: Property Market Reports
You may have noticed us being a little quiet on the blog front in recent but, I guess like most of the industry, we have been absorbing the impact of COVID19 on property development financing and our lives. Like all companies we have had to quickly look at our way of working with a priority being given to the safety of our team and clients.
Fortunately, we live in a world where home working is achievable using VoIP telephone systems, video conferencing and cloud data platforms. This has meant that we have been able to continue to liaise with clients and lenders during this difficult time. The impact of CODVID19 on property development financing is going to be significant but to exactly what extent is yet to be played out.
Naturally, we are immediately seeing the changes to the lending appetite of banks as they, quite rightly, take stock of what impact this frightening time will have on the property market. Following a very positive start to the year with home values continuing to rise, the immediate affect of the Corona Virus has seen a dramatic drop off in viewings and sales.
This culminated with the government asking all buyers and sellers to suspend their transactions until this outbreak has passed. How long this may be is difficult to say and the consequential affect on property prices and property development financing is also going to be closely watched.
The National House Price Index from Rightmove on 16 March reported that the asking prices of new sellers hit record high of £312,625, pushing annual price growth to 3.5%. They say that such record prices were being fuelled by strong buyer demand and lack of supply compared to the same period a year ago. The report notes that the number of sales agreed was up by 17.8% and that Rightmove had recorded their five busiest days ever in February. All very positive but with a rather pertinent note that it was going to be “Hard to predict how the post-election boost will be affected by the unknown impact of coronavirus”.
The property portal Zoopla has subsequently forecast a drop in transactions of up to 80 per cent year-on-year in the spring months with Zoopla Research modelling indicating a fall in the number of sales of up to 60% over the second quarter of 2020.
Affect of COVID19 on the Housing Market
All of this draws the inevitable comparisons with the last housing price crash that followed the financial crisis in 2008.
The three key points Zoopla make are that:
- House prices will not change significantly in the next two months as most sales agreed before the start of the coronavirus pandemic will continue
- Government intervention and lender action will limit the number of forced sellers in the market
- In the long term, house prices will be largely influenced by unemployment rates
Homebuyers will be, of course, concerned by parallels between the current situation and the housing market crash that followed the financial crisis. We will be speaking with our lending partners regularly and will update our data with any changes to their property development financing criteria. In the meantime, the priority is to everyone’s safety and in this regard, we hope that you are taking all necessary precautions and that you keep safe. If you want to compare property development financing simply click here!