We all know things are hugely uncertain at the moment, this article is going to explain how it is this affecting the property market at the moment?
Many people are stating the best way to describe the market as been currently suspended, the main reason been lenders are unable to obtain valuations. However, I feel this is not 100% correct. Yes, you are right to think lenders cannot send physical valuers into the respective properties but there are alternative options.
Lenders do have the option of running a desktop valuation, or alternatively there are rumours circulating that some lenders will ask the vendor to take photos or even a video of the property to work from.
Granted they will not adopt these strategies to mortgage applications where the applicant requires a 95% loan to value product because the risk to the lender is too high. However, if the applicant has a 50% deposit the risk is a lot less to the bank, this is where these alternative methods may prove beneficial. So in summary mortgages on purchases have not paused but have slowed down significantly with even some lenders removing themselves completely from the market.
Then we have to think about the viewings. It’s quite clear from the government guidelines physical viewings at properties is an absolute no, no. However, lots of agents have reacted accordingly and are offering virtual tours of properties allowing prospective buyers the opportunity to see inside. This again comes with risk and is another reason why the property market has slowed.
There is also the investors to consider. A large proportion of these are the cash buyers and will often buy the property without viewing it. All they are interested in is the balance sheet and as long as the works for them they will not be bothered about anything else.
The one thing that will have a huge impact on the market is the media. Once negativity about the market hits the media the industry will basically pause and this has already started to happen.
Yesterday the Daily Mail’s front page splash headline is “Don’t move home” and yesterday The Telegraph’s business section reports “Government suspends the housing market”.
I also feel that buyers will take advantage of how volatile the market is at the moment. I feel if people do still want to make an offer on a property they will offer a lower price than what they would have done two weeks ago. They will be hoping the seller(s) are in a position where they don’t have a choice but to accept or they feel the property market is going to drop significantly.