• Mortgage Tree

The beginning of a property recovery?

On 13 May 2020, the UK government altered its lock-down guidance by allowing property transactions to once again continue.

Despite the process of moving house never being explicitly forbidden, social distancing requirements and the economic shock of COVID-19 meant that property professionals and businesses (conveyancers, developers, estate agents) were caught on the back foot.

Many were simply not prepared, and with the majority of buyers and sellers temporarily retreating from the market, the volume of completed property transactions fell.

This was especially frustrating given that, at the beginning of the year, UK property was entering into a period of sustained house price growth.

The Boris Bounce seemingly put an end to much of the uncertainty concerning Brexit, resulting in domestic and international investors flocking to the UK real estate market.

With the number of COVID-19 cases dropping dramatically, social distancing measures are slowly being relaxed. For those of us in real estate, the question now is determining when things are likely to return to normal.

Importantly, as we begin the process of exiting lock-down, there are subtle signs that a property recovery may already be in the works.

Signs of renewed growth

At the beginning of this public health crisis, various property specialists and lending groups presented their own predictions of how UK property would be affected.

The specifics of how much these groups thought house prices would fall varied greatly, but the majority forecasted a drop of approximately 7%, which was in line with Knight Frank’s own predictions for 2020.

However, property prices have not actually experienced the drop many feared, yet. In fact, last week Halifax released their monthly House Price Index (HPI) which showed that the rate in which property prices were falling was already slowing down.

If the more pessimistic predictions, such as Deutsche Bank’s forecast of a 20% downturn, were true it’s unlikely that we would be seeing only modest month-on-month falls of 0.2%, as this HPI shows.

In the short-term, it is natural to assume a drop in house price growth as a result of social distancing measures. However, this is not a cause for concern.

House prices are not dropping because demand is not there—they are dropping because buyers are waiting for the opportune moment to make their return. It might be that a recovery begins even sooner and increased activity in the property industry facilitates a quick return to the levels of growth we saw in January.

In the long-term, however, I am more confident in my optimism. Property experts Savills made a seemingly controversial choice when they announced they weren’t changing their 2019 five-year forecast.

This forecast anticipates house prices to increase by 15% by 2024 despite the challenges posed by the corona virus pandemic.

Of course, all of this comes with the caveat that we don’t know exactly how this pandemic will ultimately play out. A virus mutation, second spike or revolutionary vaccine could alter the course of recovery for better or for worse but, as it currently stands, the short-term dip seems to be playing out in a relatively mild manner and the long-term prospects for UK property remain strong.

Article by Alpa Bhakta

Mortgages Limited

Here's what our clients say...

“Mortgage Tree showed me how to improve my credit rating as I had a few issues with my credit previously. As a result of their excellent advice I have now secured a mortgage at a great interest rate. They also helped me sort out life & critical illness cover which offers great protection for myself and my family. Mortgage Tree offers a fantastic service and I recommend them wholeheartedly.”

Charlotte - Leeds


Mortgage Calculator

Mortgage Tree - Mortgage Advisors York - Services & Standards

Mortgage Tree offers a nationwide mortgage broking service from our base near York, North Yorkshire. We specialise in mortgages and insurance. Whether you are a first time buyer or you are a buy to let investor with multiple properties, Mortgage Tree will ensure that you get the best products available.

We are a Whole Of Market broker which means that we will choose the best, most suitable mortgage for you from the hundreds available on the UK mortgage market. Our network also gets special discounted deals from lenders available only to our network.

We also provide insurance cover that will give you & your loved ones a blanket of protection that is so vital. We will endeavour to give you the best service that we can at all times.

Mortgage Tree is an appointed representative of Julian Harris Mortgages ltd which is authorised and regulated by the Financial Conduct Authority. Our FCA no. 304155

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk



Our Address...

Stay Connected...

© 2020 Mortgage Tree

Built by Elle Nelson Design

Mortgage Tree

Blake House

18 Blake St



01904 263012