Platforms fear the impact of the coronavirus on the property market
The coronavirus could undo the ‘Boris bounce’ effect on the property market, property-backed peer-to-peer platforms and estate agents have warned.
The housing market has been buoyant over the past few months thanks to an end to Brexit-related political and economic uncertainty.
In January, mortgage approvals rose to their highest levels since February 2016, as buyers returned to the market following the election result.
However, several property experts told Peer2Peer Finance News that this growth may be halted by the coronavirus pandemic as homeowners and potential buyers put their plans on hold.
“It’s certainly going to cause an issue,” said Terry Pritchard, who is director of Charter HCP and in the process of launching a P2P lender.
“It’s very difficult to gauge how much an issue and the government needs to have some sort to plan on how to deal with it. It could kill the property market for a year or two if we let it. We need some measures in place to compensate for that, maybe some stamp duty revisions in the short-term.
“We’ve had an interest rate cut so borrowing will become cheaper. I’m not entirely certain that’ll be enough. This problem is unprecedented, and I don’t think there are any emergency plans to take care of it. It needs some serious consideration, funding lines of some firms will dry up as well.
“We have a group of investors that will continue to invest and there is opportunity. We need to take advantage of anything that gives us the competitive edge.”
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Mark Williams, chief operating officer and director of credit risk at Nexa Finance, said that although the property market has been buoyant and optimism seems high with developers pushing ahead with their schemes, this has the potential to change because of the coronavirus.
“There is uncertainty with Covid-19, but we haven’t seen any of our developers cut back or stop developments, although there is concern that that could change rapidly,” he said.
“Because of the way Covid-19 has affected everything so quickly, it could affect property developers quickly, so we have to be aware of it and react accordingly.”
Mike Bristow, co-founder and chief executive of CrowdProperty, said following the end of the extended periods of uncertainty, strong pent-up demand has been released.
He now expects that the latest uncertainty from the coronavirus may well push that realisation of pent-up demand back through 2020.
“I don’t think it’ll mean there’s suddenly no pent-up demand for people moving or buying property,” Bristow said. “It’s the matter of the timescale that this current situation plays out in.”
Dominic Toller, founder and managing director of hybrid online estate agent Agent Online, said that there are still regions where people may want to move house due to major life events like pregnancy or divorce.
But he said the challenge will be that people are not wanting to view houses and that will have a knock-on effect on the housing market.
“I suspect there are some genuine real concerns on the property market and for estate agency businesses nationally,” Toller said.
“It’s disappointing having just gotten past the Brexit issue.”
However, Yann Murciano, chief executive of Blend Network, said the fears are so far unfounded and urged people not to jump into any speculative conclusions.
“Given the current coronavirus situation, markets are extremely nervous and have largely overreacted,” he said.
“I think in the short-term, we expect some disruption and continued sell-offs, however, this should be reversed and lead to a rebound as the virus eases or is controlled.”
Carl Davies, chief operating officer of The House Crowd, said the country is in uncharted territory and the coronavirus will affect different areas and sectors differently.
“If we take a fundamentals view however, there will still be a housing crisis in the UK so demand for affordable housing will still exceed supply,” he said.
“If, like The House Crowd, this is the sector of the market you support, I think that prices and demand will hold up and especially in the Northern Powerhouse.
“This may not be the same for all sectors and all geographies.”