Property Doom or Boom?
There had been pent up demand due to the market pausing, firstly from the government putting up stamp duty from as little as 1% up to 12%. Then, the uncertainty of Brexit and then the General Election. All these factors resulted in the lower market exploding at the start of 2020.
January and February saw record sales and prices rising dramatically at the bottom end of the market only then to be furloughed by the global pandemic lockdown.
It is muted that more than £30,000 will be wiped off the average value of a UK home by the coronavirus crisis as the property market is brought to a standstill and incomes fall, the Centre for Economics and Business Research (CEBR) has warned. Its economists predicted that prices will tumble by 13% by the end of 2020 as transactions dwindle and home buyers are hit by a deep recession. A slump that deep would push the average house price to the brink of falling below £200,000.
The CEBR warned that owners of rental properties and home owners in regions with the most vulnerable jobs markets will be the hardest hit
by the fallout of the coronavirus.
However, Bournemouth and Poole derive most of their income from tourism which I believe will explode all be it later than normal in the year. People may be spread among cargo for social distancing on planes.
If flying this summer meant sitting next to a crate full of nappies, would you do it?
Due to many less flights ticket prices could well soar. As the UK’s number one holiday destination, this could be a few years of record business for the area, resulting in the property market continuing to surge as it had been pre-lockdown.
With interest rates at an all time low of 0.1% per annum, there is a unique situation that exists in Bournemouth, it is currently cheaper to own a property on a mortgage, than it is to rent it. For example, if you buy a £100,000 property on a mortgage, the payments can be as little as £106 per month on a 25 year interest only mortgage, when the rent on this type of property is typically £600 per month. This is why property prices should not plummet in the Bournemouth area and in fact have the potential to increase substantially. (NOTE: £100,000 mortgage on an interest only mortgage over 25 years can cost anything between £106 – £350 PCM, depending upon your credit rating and amount of deposit used)
From my personal standpoint, I have purchased 3 properties during lockdown and I am looking for more to expand my personal portfolio as I believe, that the best time to purchase is always in adversity, not boom.