Coronavirus – Questions and answers for property investors
There is no doubt that the current lockdown situation has impacted on all property plans. This applies to the whole sector, regardless of whether you are investing in property or looking to sell. For anyone involved with property, the essential thing now is knowing how to move on successfully from here. But what should you be thinking about?
1. Should I reduce or change my offer, after agreeing to buy?
The real secret to answering this question lies in how you feel about the property. If it will be your dream home which ticks all the boxes, you may wish to keep your current offer on the table to avoid losing it. While the coronavirus pandemic is having an adverse effect on the property market, there is still only a limited number of desperate sellers. From a seller’s perspective, while you want to get the best return possible on your property, it is wise to remain logical when setting an asking price after lockdown.
2. What does this all mean for prime Central London property?
As any high net worth individual knows, prime Central London property has always been one of the most profitable investment locations in the UK. This will remain the case in the future. As with other major global property markets affected by Covid-19 though, the prime Central London market is seeing a period of stagnation now. This should not cause undue concern as patterns in the market signal it will follow previous downturns and be among the first to recover. It is likely that post-lockdown Britain will see some move to other parts of the country in search of more space but prime Central London property will always be in demand with buyers.
3. Do you advise investing in property now?
Investing money into real estate for the long term has always proved profitable, as long as you carefully select the right property. Before using some of your capital to invest, we would advise you to think about the following:
– What property investment strategy do you have? Are annual yields more important to you or capital appreciation?
– If you value annual yields more, then investing in property outside of London is advisable. A 2 bedroom flat in London, for example, may generate up to a 4% yield while a similar sized property in the country could fetch you up to an 8% yield.
– If you value capital appreciation more, then focusing your search within London is worth considering. Just be sure to carry out a concise deal analysis before committing to any purchase.
4. What is happening to house prices?
House prices are always one of the most important factors to research when investing in property. Although it can be hard to predict for sure, supply and demand will normally dictate the state of any market. Expert forecasters are expecting any economic shock from the coronavirus pandemic to be relatively short. This has seen them expect UK house prices to rise by up to 15% over the next 5 years potentially.