UK House Prices: Annual Drop for First Time in Eight Years

There are few industries which remain untouched by COVID-19’s disruption, including property. UK housing prices have fallen for the first time in eight years, although it is expected they will bounce back after this current dip.

UK House Prices 2020

There are few industries which remain untouched by COVID-19’s disruption, including property making it a good time to invest and buy a property.

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UK housing prices have fallen for the first time in eight years

Although it is expected they will bounce back after this current dip.

House prices have dropped from an average £216,403 to £218,902, with a monthly decrease of 1.4% and an annual 0.1% for the first time since 2012, as revealed by a recent Nationwide survey.

However, these figures are an average for the whole of the UK and it is important to differentiate the situation for the specific region you are looking to buy or sell in.

For example, the north of England and Wales were all showing a healthy house price growth until very recently.

The survey also found that more families are looking to move into larger homes, after spending lockdown in cramped spaces, which is, of course, positive news for the housing market.

Good time to buy

Generally, reduced housing prices usually encourages more activity on the property market, which in effect will mean that developers have a larger availability of potential buyers. 15% of people were considering moving as a result of life during lockdown, 1/3 viewed their homes differently, e.g. the need for a garden and more open space.

Although 22% of those surveyed said they were just going to get construction work done on their current home.

Although the current house price trajectory is downward, sales data reveals that, on average, buyers are paying full asking prices or only very slightly lower, with the average ‘discount’ on asking price of between one and three per cent.

This is also both good news for sellers and buyers as it offers some hope and reassurance for substantial financial gain.

What does this mean for developers?

Generally, reduced housing prices usually encourages more activity on the property market, which in effect will mean that developers have a larger availability of potential buyers.

Additionally, the impact of COVID-19 has led to many government incentives including; reduced rates of stamp duty land tax, reduced interest rates and first-time buyers’ discount scheme.

These incentives are used to encourage buyers and provide help to keep the market healthy.

Since the property market has essentially been frozen during lockdown, there is a number of buyers whose plans to purchase had to be put on hold.

This surge of pent-up demand means there is a strong market of potential buyers for those who have a property to sell.

Just as house prices are falling, so are land prices, construction costs, and interest rates – which works in the developers’ favour and means their return on investment is less likely to be so heavy-hit by COVID-19 than people may assume.

With all of this in mind, now is a good time to consider buying land and developing a property.

Housing prices post-COVID

Most property experts predict a further slowing down of the property market towards the end of 2020.

However, no one can say confidently how much further house prices will fall.

Again, it is essential to pay attention to your local market and stay on top of regional trends.

COVID-19 has had varying impacts on different areas, and places that have higher levels of unemployment.

Localised Covid-19 lockdowns will see lower house prices.

However, there are other factors too such as areas with high demand and reduced supply of housing are unlikely to see any significant reductions in house prices.

This is particularly true for cities with decreasing housing stock such as London and Edinburgh, and most high-demand areas in south-east England.

Some developers may be putting their construction plans on pause before they have a better idea of the future of the housing market.

However, while the post-COVID market remains uncertain, evidence shows developers will not be short of potential buyers if they start on their construction plans soon.

See: The fast-selling development that was completed and sold within 12 months

How can Hunter Finance help?

We lend to developers from private funds, for new build projects, redevelopments and major renovations.

If you are looking to take advantage of the current opportunities in the property market, Hunter Finance can provide you with the funds you need to do so.

We offer property loans of up to £2.5m and bridging loans of up to £1m.

See: How one of our developers made a profit of over £1m.

To find out if you are eligible for project funding, or find out more about what we do, get in contact on 01825 749721 or email: Info@hunterfinance.co.uk


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