The market could take five years to recover from the Coronavirus crisis after possible double-digit percentage price falls and fast-increasing repossessions.
That’s the bleak assessment of a peer-to-peer lending platform, Sourced Capital, which has analysed property market data from past recessions in a bid to estimate - very crudely - what might emerge from the current crisis.
It suggests that the early 1980s recession lasted for over a year and produced a four-fold rise in repossessions. The platform says the property market nonetheless remained resolute where house prices were concerned at least, with an increase of 8.6 per cent.
In the early 1990s recession, again lasting over a year, prices fell very slightly - some 1.4 per cent - although repossessions went through the roof, increasing more than six-fold. “When the recession ended in quarter three of 1991, it took five and a quarter years for house prices to recover and exceed the pre-peak highs of £58,773” says Sourced Capital.
In the credit crunch of 2008-2009, property prices slumped by almost 14 per cent on average with a 445 per cent rise in repossessions. Sourced Capital says: “As with the recession that preceded it, it took five years for prices to recover to £185,362 in Q2 of 2014, marginally higher than the pre-crash peak of £183,082 in Q2 of 2008.”
So what of the Coronavirus crisis?
“The real worry is that any prolonged period of national lockdown could bring about a recession and it is at this point the market could begin to struggle” explains the platform’s managing director Stephen Moss.
“We know from market data on previous recessions that such an event will cause property prices to drop and with current market conditions and values most similar to that of the previous recession, this could mean a drop of 10 per cent and upwards” he adds.
He believes the recovery may not be complete until 2025.
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It must be great to have a crystal ball!
Should have been cleaned first, before use, though.
This assessment lacks insight. With almost zero interest rates you can’t compare the current situation to earlier downturns. Apart from which the 90s recession for example caused prices to almost halve in some areas, volume of sales went down by over 50% and have never recovered and there was no meaningful Lettings market. The Lettings market as we know it really got going on 1995 with the availability of buy to let mortgages and lenders allowing those in the mortgage trap to rent their properties and buy another. Since the the rented sector has acted as a pressure relief valve for prices which have only really gone up as interest rates have fallen. We are in uncharted territory now, we have been since 2008 and the virus has added an additional dimension of uncertainty. The likely outcome in my view, although by no means certain, is the market will recover relatively quickly once the lockdown ceases with more emphasis on the home than before with a consequent increased desire to move. However and it’s a big one, the difference maker will be stamp duty, to create a quick recovery stamp duty needs to be suspended, abolished, or drastically reduced. Doing so will be the single most effective strategy to help with the recovery as moving home stimulates all aspects of the economy and the cost in lost tax would be negligible
Typical negative article to get publicity for an unheard of group, with a series of incorrect information as you have pointed out.
In addition to your comment as someone who worked through the late 80's early 90's recession is that at the time endowment mortgages were very popular but were also responsible for a huge increase in the number of repossessions, endowments being a fixed term contract that had to be paid every month, the banks were unable to extend the term of the mortgage to ease the pressure of payments forcing thousands into repossession, those circumstances do not exist today.
😂, have they got this weeks lotto numbers too
I'm surprised you are reporting such ill-informed market opinion. There will be regional differences plus as previous comments have pointed out very different picture today re: commercialisation of buy to let market and low interest rates.
The market COULD take five years to recover from the Coronavirus crisis after POSSIBLE double-digit percentage price falls and fast-increasing repossessions.
I COULD get run over by a bus in the next five years and it’s POSSIBLE that the driver will be a man.
Don’t you think we all have enough issues at the moment without this type of scaremongering report!
How many times are we told about ‘the beast from the East’ and we get a slightly windy two hours or ‘the worst winter storm ever’ and we get 1cm of snow that melts over night!
Only bad news sells media people!
Now have a great day unless you’ve got other plans.
Absolutely right Carl. So far today, this article has had more hits than the others and more of us have commented. Which also means that more of us have seen the adverts on this site.
There is always some headline grabber that wants to say I was the first to tell you all, however, none of the market conditions in past markets are in place today, yes the market will suffer if we go into recession thats not rocket science, there was real pressure on the market with healthy pipelines across the country, so long as the job market gets back on track quickly I can see that pressure continuing
As per usual everything that happens is media led if they broadcast bad news and predict that prices will drop they will cause it to happen,
What we need is a positive prediction to keep
Everything buoyant and help the economy
The country needs a healthy housing market for so many different reasons including so many industries that are effected inc builders, plumbers, furniture makers, glaziers, kitchen fitters etc etc the list just goes on
So for once let’s hope rather than selling a doom and gloom story Help us keep this industry going
As you suggest the simple act of purchasing a property has so many attendant benefits for the general economy.
Govt has failed to realise this.
Govt needs to get the property market moving.
The ONLY way this will be achieved is to drop the majority of the MMR.
All SDLT should be suspended for at least the next 5 years for any purchase up to £500000.
IO residential mortgages with terms as a standard from age 18 to 90 with NO repayment vehicle required beyond that of selling the property to repay the mortgage.
Also tracker IO mortgages at no more than 2% ABBR.
Also to allow such IO residential mortgages to be up to 95% LTV.
These changes would allow many tenants to buy properties.
Many would also be able to miss out being a tenant and buy.
They could afford to buy and if they wished they could take on lodgers and rent where they need to be.
But at least they could get on the housing ladder and by taking in lodgers they wouldn't be subject to the new CGT regulations.
By visiting their home at least once per month to comply with residential insurance conditions the live-in LL would not be subject to tenancy regulations and could easily get rid of feckless rent defaulting lodgers.
Of course it would mean mostly unrelated sharers and definitely no DSS lodgers.
At least 4 lodgers could be housed in a homeowner's property without requiring a Mandatory HMO licence.
Residential homeowners should be allowed the facility of IO mortgages.
If it is good enough for LL then it should be for homeowners.
With LL restricted to usually 75% LTV this will give a competitive advantage to aspirant homeowners.
The demand is out there from homebuyers.
It is just the ridiculous MMR which is preventing aspirant homeowners from buying.
A brief scan for the source of this conjecture led me to leap straight to the comments section where I have found far more reasoned analysis.
Considering "Sourced Capital" offer a specialist property investment division could this be a cunning stunt to enable greater returns for their investors?
I'm just pleased (with no derogation to EAT) that the public may not get to read the volume of industry psycho babble that we do daily.
Media makes money from controversial posts.
Little analysis in this one
No, just no!
Slow news day?
The comparisons made are laughable - I can’t be bothered to list the many reasons for this to be ignored. 🙄
Clickbait twaddle.
Worst case we go back to 2008, 600,000 houses still went through 40% of the average 1million.
The one thing I will not do this time around is listening to corporate bull about lets hit the phones call all the old apps force those into looking at houses they no longer have an interest in or can no longer afford a mortgage for.
We need to just help people that do want to look, help them get mortgages and help them get onto the property ladder. The corps will be double F'd as they can no longer all move into lettings and make a killing on tenant fees.
This new market will be a great time for independents to grow, use the expertise you have. YOU WILL NEED A LETTINGS BUSINESS if you don't already have one you either had won the lotto just before the last crash or you have not been in business since 2008.
Charge what you feel you are worth but be honest tell people your fee show them on the valuation what you do to justify that fee (dont do what onlines hear all the time, you dont justify your charge but point out why the onlines are soo bad and thats why they are so cheap)
Customers, contact call your contacts now not to sell just touch base tell them you will call back once we are back open these virtual valuations are only any good if you are charging next to nothing as you wont be able to tell your why over a skype call. And most of all be safe most of us will be able to get through this but look at your plans and targets make them achievable over the next 3, 6, 12 months
Hopefully we will see a double digit drop as house prices are way to high in comparison to income hence the lack of FTB’s. Whilst there are some good estate agents there are many who have overpriced houses to win the business.
There are also way to many poor agents out there who deserve to go out of business for there poor service, doggey dealings and driving round in expensive leased cars which they can’t afford. 1980’s flash boys will fall I’m afraid
Absolute twaddle you talk.
Prices are as they are due to MASS UNCONTROLLED IMMIGRATION.
There is too much demand which neans prices rise.
No surprise therefore why SE prices are so high.
That is where all the immigrants want to live
Funny how they don't ALL want to live in Scotland which has a population shortage.
Nope they all want to live in London and its near environs.
FTB will just have to look at more affordable areas like FTB have ALWAYS had to do.
Stop listening to whiney GR who believe they have the right to be able to afford to reside in expensive locations.
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