While news of property market drops can be concerning for those thinking of investing in the UK market, savvy investors shouldn’t put their purchases on hold because of this.
Historically, the UK market has shown many times how resilient it can be in times of economic uncertainty. A prime example is the beginning of the Covid-19 pandemic in 2020, when property prices saw an initial drop following global lockdowns, increased unemployment and market turmoil.
In early 2020, the property market came to a halt due to a temporary suspension of property viewings, resulting in a significant decline in activity. By the end of March, Zoopla noted a substantial 40% decrease in demand. House Price Index data from this time shows a 1.01% drop in average house prices between March and April 2020.
However, by April, the market began to recover, with Nationwide reporting a 0.7% increase in property prices and a year-on-year growth of 2.4%. This upward trend continued into May, when buyer demand surged by 88%.
Over the summer of 2020, the rental sector experienced a notable surge, with demand for lettings increasing by 22%. This marked a significant shift in market dynamics as the year progressed. By September, it was reported that UK house prices had surged to an all-time high, with the biggest rise since 2004.
Those who purchased investment properties before or during the Covid-19 pandemic were able to benefit from some of the most impressive capital growth returns, which cautious buyers will have missed out on.
