The world has rapidly changed with the spread of COVID-19. We’ve now been in lockdown for several weeks and have had to adapt our lives dramatically.
Though real estate has been classified as a non-essential service, housing is a fundamental basic need and always will be. People will always need to move regardless of what is happening in the greater economy. So, with the coronavirus epidemic amongst us, I think we need to look at things in the short, mid and long term perspective.
SHORT TERM
Banks are Lending. In the short term, the UK government has announced that they are offering 3-month mortgage relief for anyone who needs it. Also mortgage brokers have reported that those banks who had withdrawn from the market when we initially went into lockdown are now starting to lend again, based on desktop valuations and loan-to-values (LTV) of up to 85%. Interest rates are still historically low and therefore this is something that you might want to take advantage of.
Virtual Viewings. We are now able to see most of the housing stock that’s available for sale online and many agents are offering virtual tours and some virtual walk throughs of properties on their sales listings. These walk throughs can give you a really good sense of a property and perhaps more importantly, will help you to eliminate a property that is not be right for you.
MID-TERM
In the mid-term, depending on how quickly we can get out of this, we will definitely have to tighten our belts. Having been a banker in the past, I know how important it is to have a budget, be very clear on what your outgoings/expenses are and what your income/revenue is, so that you can see where it is that you can save expenses and cut out anything that’s non-essential.
~Novel Serialisation: Heavens Fire~
For those sellers who still need to sell, they need to get a sense of the true market dynamics and make sure that they are pricing and presenting their property accordingly. It is important to make sure that they’re not over pricing their home and be aware that there might actually be even fewer buyers out in the market than before the pandemic.
LONG TERM
In the long term, once the world starts to come out of the virus and economies start to improve, we will see a rebound in the housing property market. Real estate is always an option as an investment vehicle. We’ve seen over the last few weeks how quickly the stock market can crash and lose all of the value that it had amassed over the last few years. While the housing market has declined too, it is a tangible asset that provides a fundamental need. One of the things I also like to point out is that there are not many other asset classes where you can actually borrow money to purchase. In the case of property, you may need 15 – 40% equity, but conversely, nobody’s going to lend you money to buy stock of a company.
London is still a world class global city with excellent transport, education, rule of law, banking and finance systems and therefore will continue to be a place where people want to live and work. Housing underpins this and we continue to have a chronic housing shortage in London; factors that make property investing a sensible option in the long term. Some landlords may struggle in the short term, with tenants unable to pay and other tax considerations, which may force them into selling. However, other new investors may see this as an ideal time to take advantage and buy investment buy-to-let properties.
TO CONCLUDE
There is always plenty to consider when thinking about buying or selling a property but the fundamentals of the housing market are still sound.
Ugo Arinzeh is the founder and Managing Director of Onyx Property Consultants. She has an MBA in finance and spent over 10 years with Bank of America Merrill Lynch structuring and negotiating real estate transactions. Over the years she has personally bought, sold and managed properties both in the US and London. Ugo is passionate about property and founded Onyx to utilise all her skills from her corporate and investor background to deliver exceptional results for her clients. As part of Keller Williams, Onyx is connected to the largest network of agents globally.
