Private Finance comments on HMRC Property Transactions Data for April
21 May 2020
Shaun Church, Director at mortgage broker Private Finance said: “These latest figures expose the true impact the lockdown has had on the UK’s property market, with the government’s decision to freeze the bulk of transactions to reduce the spread of the virus resulting in the market hitting the wall hard.”
“Transaction volumes may recover quickly following the government’s decision to reopen the property market in England. Huge pent up demand could be released as prospective buyers rush up to pick up their pre-lockdown property searches, while those who put their purchases on ice may try to rapidly push them through.”
“However, friction in the market may intensify as buyers attempt to negotiate lower prices with their vendor. This may fall on deaf ears as sellers seek to crystallise pre-lockdown valuations*. If pushed too hard, sellers may pull out of deals altogether, resulting in overall transaction levels stagnating.”
“There are signs of good news for borrowers, with lenders now returning to the market with higher LTV offers. However, the landscape has changed from when lenders approved original mortgage applications. Many borrowers will either have been furloughed, taken salary cuts or suffered sharp falls in their income. The hope is that any tighter credit controls that may be applied will be temporary measures and that lenders will take a pragmatic view in the new environment. Ultimately, we should see things improve as the market – and the wider economy – begins to reopen.”
*The latest ONS house price index shows house prices rose 2.1% over the year to March 2020, just before strict lockdown measure were enforced.
