Where is the property market headed?
The UK is currently in a property bubble that is being driven by the impact of COVID-19. There has been an increase in transactions largely due to a backlog of deals that were put on hold due to the enforced lockdown but also the result of people moving away from the city or urban centres as a result of re-evaluating work-life balances.
There is no doubt that society’s behaviour and aspirations are changing, and current figures highlight the resilience of the UK property market. As we recover from the restrictions of lockdown and announcement of the stamp duty holiday, there has been a mini boom in activity that many predict will come to an end when the Government support schemes cease. Many lenders are also starting to experience more caution with regards to mortgages.
The latest house price data published on GOV.UK by HM Land Registry for June 2020 reveals average house prices in the UK increased by 3.4% in the year to June 2020, up from 1.1% in the year to May 2020. The report also reveals over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The beginning of 2020 saw annual growth in the housing market before the Covid-19 restrictions were put in place at the end of March 2020.
In contrast, the impact on commercial real estate has seen a rapid reduction in tenant demand for space as more people are working from home resulting in property values and rents starting to fall in the next year as businesses look to re-evaluate their working environments.
Despite these changes in activity in the property market, assessing any risk associated with property or land purchase remains the same. The level of due diligence that is required has not decreased, and people are on average more risk-averse based on their heightened underlying senses, driven by COVID-19. Issues such as climate change and environmental risks remain at the forefront. Volatile weather conditions are a crucial future risk factor when considering property transactions. Working with our expert team at Ashfield can help you to adapt to the changing world we are living in and protect and enhance the value of your land and property investments.
The UK is currently in a property bubble that is being driven by the impact of COVID-19...