During the current COVID-19 pandemic, global economies are being devastated by the current unprecedented circumstances.
Many countries are having to precariously balance health and the economy, with the former understandably taking priority. The consequence of this however is that nearly every industry has taken a significant hit, with not only the lockdown limitations but also the loss of income a harsh reality for many.
Naturally, you would assume that the property market would be heavily impacted by this, with most construction only just starting to resume now. So, the question for many will be, is now the time to invest if I am able to?
Stability in The Market
Although recent data shows that property sales have fallen in the UK, there are signs that activity is beginning to return to the market. Confidence is returning to the market with good reason, property is proving to be resilient to the economic downturn, much as it has in the past.
When compared to other investments in stocks and shares that have
crashed, being highly susceptible to economic downturns, property has remained stable. Something to consider however is that whilst property is less prone to fluctuations, it does mean that the full effects of the COVID-19 pandemic will yet to be realised.
Historical Strength
The obvious strength of property is the fact it is tangible. You have a physical asset that you can use, unlike a stock. Even if the value of the property depreciates somewhat, you are still left with the property afterwards. In most cases, given you have done some research prior to purchasing, the value of the property will increase again in the future.
The 2008 financial crisis is a great example of here. Whilst the fallout of the global economic fallout caused property to lose roughly 20 percent of their value, the stocks market was hit significantly worse. A year on in 2009, some stocks had fallen by as much as 50 percent, the greatest recorded since the great depression.
In addition, previous pandemics in SARS and H1N1 caused short term disruption in the property market, but a recovery was evident within six months, again less affected than stocks. Put simply, property is a far safer investment to make, but a well-timed purchase in stocks may realise greater returns over a short period.
Of course, we are reasonably ‘early’ when it comes to the lifecycle of the pandemic and as time goes on, we will have a greater idea of the true impact across economical markets. With no definitive date set in place across the UK to view property again, it is hard to accurately predict this.
Ways to Lower Risk
The property market is also not as straight forward as purchasing or letting out a property. Whilst the risk is lower to investing in real estate, there are some good practices you can follow to reduce the risk even further. There are many ways to invest in the asset, with rising popularity seen in the broad area of debt investment.
A loan note, a form of debt investment, is a way in which investors are realising high returns over a short period of time. Whilst the risk is greater than the traditional purchase of a property, the rewards are greater, and is considered less risky than investing in stocks. Before committing to an investment of this kind, find a professional in the field that has a good reputation and experience in the sector.
There is expected to be an increase in banks reducing their financing of new developments as they again become more risk adverse. With the UK in desperate need of suitable property to those that need it, alternative financial providers are likely to be essential in keeping the UK from getting deep into a housing crisis. This proves to be an ethical and profitable investment for prospective investors.
The Future Of The Property Market
As with almost every market, we expect to see some changes in the property sector as a result of the recent pandemic. Crisis has a way of changing things; people pivot to remain productive and some good is likely to come out of this.
Whilst we have seen the shift to digital for many years, this has been accelerated as a result of the lockdown. The trend in the industry has been a shift to online, forming relationships with products and customers without the need to meet face to face. An increasing number of people are independently seeking property investments through reputable introducers.
Whilst the property sector has struggled to grow with the digital age, you could argue the lockdown has accelerated the push to online. From investment online to virtual property hunting and viewing, the sector is adapting for the better.
Property has long been a secure investment asset, and this is more evident than ever through the current crisis. For those with capital to spend, now is a great time to invest in what is perhaps the safest form of investment you can make.