Jamie Johnson, CEO of FJP Investment, pens his thoughts on on investor sentiment to property.
Investor attitudes are still, understandably, being influenced by the risks posed by Covid-19. Although we’re now witnessing the end of lockdown and the beginning of the slow transition back to normality, the economic effect of the coronavirus outbreak is still being felt across the nation.
This is especially true in the property market. At the beginning of the year we witnessed a surge in activity as a result of the dissipation of Brexit uncertainty. This was due to Boris Johnson’s eventual passing of the EU withdrawal bill through the House of Commons.
Pent-up demand for UK property had accrued throughout the years succeeding the 2016 referendum. With progress finally being made on Brexit, investors were optimistic and found themselves in a position where they could begin planning for the future.
Unfortunately, this surge in activity was momentarily brought to a halt in response to lockdown measures implemented by the government to contain the Covid-19 outbreak. These restrictions have for the most part worked, and as the economy is kickstarted into motion once again, the question is whether we will see this surge in demand for real estate return.
To provide some insight, FJP Investment surveyed 850 investors to uncover their attitudes towards property investment in the current climate, as well as their outlook for the coming months.
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Regarding general attitudes towards bricks and mortar, property is still considered a resilient asset class. Just under half (48%) of the investors surveyed believe that property is a safe and secure asset amidst the Covid-19 pandemic, with only 12% disagreeing with the sentiment.
Such an outlook is backed up by how successfully property has held up during the pandemic. Property prices were undoubtedly going to experience negative growth as market activity slowed.
However the rate of this negative growth is already slowing down, and the latest Halifax House Price Index (HPI) shows that despite the events that have transpired, house prices in May were still up 1.8% since May 2019.
What is somewhat troubling, however, is the percentage of the surveyed investors who deemed the current climate too risky for any property purchase.
A total of 43%, in fact, said that they were holding off on making any major financial decisions until the pandemic was entirely over; and one-in-five (20%) admitted they are no longer considering buying a property in 2020 due to Covid-19.
Thankfully, we can at least be sure that the virus outbreak will, eventually, end. Although no-one can guarantee that a second spike in cases or virus mutation is off the table, FJP Investment’s research shows there are good reasons to be optimistic about the property market quickly bouncing back.
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