Jamie Johnson

43% of investors postponing major financial decisions until Covid-19 has passed



The coronavirus pandemic has drastically impacted the way investors are managing their financial portfolios. At the beginning of 2020, when the so-called ‘Boris bounce’ was in full effect, no one could have predicted that a virus outbreak would bring markets to a standstill.

This was particularly true for the property market. For lenders and brokers, the initial surge in buying activity was positive. Repressed demand was being realised, mainly due to the progress finally being made on Brexit. Covid-19 changed all of this. 

With lockdown measures slowly being relaxed, the question now is whether investors will return to the property market. Will we see another case of pent-up demand being released, or are buyers retreating from real estate in the long term? 
To answer this question, FJP Investment recently surveyed 850 UK investors to uncover their perceptions towards property and how they have been generally managing their financial portfolios during the crisis.

The research showed that bricks and mortar remains a popular asset class. Almost half (48%) of those we surveyed said that they still viewed property as a safe and secure asset, in comparison with just 12% who disagreed. 

Demand is one thing; having the intention and ability to act on it is entirely another. With lockdown measures changing the way investors are able to buy, view and complete on property transactions, we sought to uncover how many prospective buyers had been deterred from investing in real estate in 2020. 

Safe yet suspicious

20% of the investors FJP Investment surveyed admitted that while they had been planning on buying one or more properties in 2020, they have since decided against this due to Covid-19; interestingly, this figure jumps to 39% for those aged between 18 and 34. 

Such hesitancy is understandable given the completely unprecedented nature of the pandemic. The lack of activity in the housing market, as a result of industry professionals clambering to figure out how to operate in a socially distanced manner, meant that house prices have experienced a small contraction. According to Nationwide, house prices in the UK were down by 1.7% month-on-month in May. While negative house price growth is a cause for concern, the same house price index also revealed that year-on-year house price figures had grown by 1.8% since 2019.

Importantly, we must also understand the difference between demand for property and the ability to act in the current circumstances. The FJP Investment survey revealed that 43% of investors did not plan on making any major financial decisions until the pandemic has passed.

Looking to the future 

The two big take-aways from our research are that property is still widely regarded as a safe investment choice, and investors remain hesitant to make any decisions until they are confident that some form of normality has resumed.

This bodes extremely well for the property industry generally. Obviously, we cannot be certain on how the rest of this pandemic will play out – a second spike or virus mutation is always on the cards. However, the majority of disruption caused by Covid-19 has already seemingly been inflicted. With investors still optimistic about property, there is good reason to expect a rise in transactional activity once there are minimal social distancing guidelines remaining in place.
 
Ultimately, we will have to wait to see if such a hopeful outlook is proven correct. But I am confident that once there is more certainty about the future, there will be a rush of activity amongst buyers and sellers. Consequently, we could witness another surge in transactions as the market corrects itself. 


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