Proud Mommy of Queen and Princess

Friday, September 25, 2020

How COVID-19 impacted the real estate market in the UK?

Michelle Lalic September 25, 2020 0 Comments

This COVID-19 pandemic really affects the whole world. It has rapidly spread and truly a global crisis as no country is spared. A lot of businesses have been impacted. Some responded to reducing hours of work, manpower, or closing down temporarily. Even the real estate industry is affected by this pandemic.

What is Real Estate?

When people ask "what is real estate investing" it normally has to do with you finding a good property below market value that will be generating short or long-term income. Whether it is residual income or profits from buying wholesale and selling retail. It all depends on what you have acquired the property for. Also depending on if you decide to sell or keep as a rental property, will determine what is known as return on investment. Basically, it comes down to how much money you spent versus how much money you got back in returns.

When we say real estate it always comes with a mortgage.

According to Money Advice Services in the UK,

"A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is 'secured' against the value of your home until it's paid off. If you can't keep up your repayments the lender can repossess (take back) your home and sell it so they get their money back."

Here's Mortgage Calculator UK will help you calculate the interest rates of your loan.

In addition to that, across the United Kingdom, around 65 thousand to 70 thousand mortgages are approved each month. This is from a low of around 30 thousand after the global financial crisis of 2008 to 2009. Prior to the recession, the monthly rate was closer to 80 thousand to 130 thousand loans completed per month. In the first quarter, this amounted to £63.3 billion in new loan originations.

The UK Government published a guide on home moving during the coronavirus outbreak.

The process of searching for and moving into a new home is different because property agents, conveyancers, and other professionals have modified how they work to reduce the risk from COVID-19. These changes could include doing more online, such as offering virtual viewings; vacating your current property during viewings; and ensuring your property is thoroughly cleaned before someone else moves in.

The Bank of England cut its interest rate to 0.1% on March 19, 2020. In spite of the BoE easing policy, many banks have tightened lending standards.

During lockdowns far fewer homes were sold across the UK, leading to record sales from pent-up demand after the lockdown ended.

According to The Guardian, UK recession expected to continue until spring amid Covid-19 surge. City says economic fightback is running out of steam as new restrictions are announced.

As a Covid-19 second wave spreads and the government launches fresh measures to restrict business and social life, City economists warned that the fightback from the deepest recession in history begun this summer was running out of steam.

Dashing hopes that the Covid recession could be among the shortest downturns in history, analysts from Bank of America said growth in gross domestic product (GDP) would probably stall in the fourth quarter and the first three months of 2021.

Robert Wood, the chief UK economist at the bank, said: “We struggle to see how the economy can grow in the fourth quarter with escalating lockdown measures, fading stimulus and Brexit risks.”

At the end of the day, everyone should stay at home, be safe and be strong. May this pandemic ends very soon. Let's all pray and have faith.