What will happen to prices?
It is of course impossible to predict at this stage what London property prices will look like once we resume to a state of ‘normality’, whatever that looks like.
Our team at SP Property have successfully navigated clients through various ‘crisis situations’ over the years, including the 2008 financial crash and the Brexit vote aftermath, so we feel well prepared to draw on past experience.
In the financial crash particularly, we saw the biggest impact on transaction volumes, with price falls on those low levels of transactions.
In both cases there were of course discount opportunities to be seized, but a large majority of sellers proved themselves to be resilient and many chose to postpone selling where they didn’t need to. Low interest rates helped make this possible.
This resulted in many sellers either staying put, deciding to retain properties in their portfolio for the long term, or renting out their properties until prices recovered.
In January and February this year we saw signs of higher transaction volumes and stronger prices, and it will remain to be seen what sentiment will emerge from this period.
Where price renegotiations are reasonable, sellers will face the decision to either accept them, or to withdraw their property from the market and sit it out for even longer.
With so many buyers and sellers having held off for so long since the Brexit vote, we believe that practical decision making will return to the market for ‘needs based’ buyers and sellers – at whatever price levels emerge – but discretionary transactions may take longer to come back.
Saying that, we have had interest from a handful of our landlords who are open to selling their properties for a discount, so that they can invest the proceeds in the stock market while it is so low. There should definitely be opportunities for buyers who can move fast.
Savills has issued some excellent research outlining their predictions for the year ahead, citing a potential “sharp, short economic contraction in 2020, particularly in Q2, followed by a rebound in late 2020 / early 2021”.
We highly recommend reading the report in full: Savills Coronavirus research update