Young and successful entrepreneur, Tulip Group owner – Siddharth Mahajan from London analyses various possibilities that are bound to arise in the real estate sector given the Covid 19 crisis and whether or not it is a good time to invest in property.
The global shutdown in response to the coronavirus pandemic is going to have big effects on real estate markets worldwide. However, the situation we’re about to see play out will not be the same as what we witnessed in the wake of the 2008/2009 global real estate crash when some countries like Spain, Ireland, etc. saw property prices fall by as much as 70% and more.
Right now, it’s a buyer’s market, so if you’re not afraid of a little risk, this could be a good time to buy property – but don’t rush into it. Post-lockdown, investments will be a slight gamble, it’s a question of how can you swing those probabilities in your favour.
That being said, buyers from Asia have long embraced the practice of shopping for London homes without physically seeing them, but remote sales to U.K. natives are becoming more common amid the coronavirus pandemic.
For local prospective homebuyers, now is the time to prepare and ensure you have everything in order so you can press ahead with a purchase once the lockdown is relaxed. This is particularly true when it comes to assessing your mortgage options. More and more lenders are not taking on new applications, while others are retracting on mortgages that had already been agreed in principle.
Be bold, buy smart, and hold on. Interest rates will remain low; many will feel the financial squeeze as unemployment soars. If you have access to capital, bid fiercely and do it now. You would be naive to expect an immediate 15% reduction in guide prices upon market return, but it is guaranteed that if you put a bid on the table, 20% below the asking price, those in need of liquidity will find it very difficult to say no to. Be patient, take a 10-year view, the recovery will be a long time coming, but remember, there is no better track record than that of London.
Given the lockdown and pausing of key activities in the housing market, statistics on the number of properties coming to market, new seller asking prices, and new sales agreed are not meaningful. Inevitably, some buyers are asking for price cuts to cover them against potential price falls when lockdown lifts.
So, Is Now the Time to Jump?
In some cases, this is the time to act. But be wary of pre-construction deals in the near term. Deal only with solid developers with proven track records in their markets. Whatever your decision, on selling or buying, bear in mind that the UK is not yet past the peak of the virus, meaning that lockdown could be extended again. It will be quite a while before the market goes completely back to normal.
How might the Government help the property market?
“Whether prices will fall once London comes out of lockdown – and by how much and for how long – will depend on wider economic factors, in particular the scale of job losses. However, support from banks and the government in the coming months will be crucial.” Says Siddharth Mahajan from London.
“The Government is already in talks with house builders about the possibility of continuing Help to Buy for a further year beyond its April 2021 expiry date. The Government’s equity loan scheme cuts first-time buyer deposit requirements for new homes to five per cent.” added Siddharth Mahajan from London.
Born and brought up in India, Siddharth Mahajan is a passionate individual who keenly pursued a career in the hospitality industry and travelled across oceans to find the right direction for his passion. To his credit is a long-drawn career of exemplary milestones in the field of hospitality. Today he owns a business that has branched into serviced apartments, HMOs and New build properties. He is deemed to be one of the youngest yet most successful real estate entrepreneurs in the UK.