P2P will survive the coronavirus recession

Although the coronavirus will cause a recession, the peer-to-peer lending industry will survive, CrowdProperty’s new non-executive director John Mould has predicted.

The former chief executive of ESF Capital and ThinCats who recently joined CrowdProperty, said that a recession is defined as two quarters of negative growth and this pandemic will cause that.

Read more: CrowdProperty working with borrowers to mitigate the risks of Covid-19

Read more: Industry reacts: P2P would survive a possible recession

“I think it’ll ride the UK into a recession, some companies will survive, some will be robust and become stronger,” he said.

“I’m fairly pessimistic about the next six to 12 months but I would imagine the recession would have bottomed out by the end of the year.

“However, the P2P sector will go through this and come out the other side.

“And in CrowdProperty’s sector I’m not at all pessimistic because it doesn’t matter if there’s a recession, people still need to build houses and lots of people will want to invest in property development. Many consumers have money in the stock market and want to recover.

“It’s an alternative asset class offering a secure return and I think a lot of people will be attracted to the sector.”

Read more: Quantuma: P2P platforms need to prepare for the worst

Mould said that recessions take time to work through different sectors and some will be affected more than others.

“Undoubtedly companies will go through stress, for example, firms in certain sectors like leisure, whereas other sectors like pharmaceutical manufacturers will not,” he said.

“Lenders in this space, such as P2P platforms or banks, will have to be patient. Some will be great companies but will have a tough time for the next six to 12 months.

“I’d like the sector to be patient and help these companies work through that time.”

Mould said that the property market will eventually return to normality when people start to view houses and move again.

“I’d like the country to panic less,” he said. “I think the reporting of the coronavirus has been so negative and has encouraged panic buying behaviour.

“CrowdProperty will keep lending and developers will keep borrowing and give great returns for investors.”