Peer to peer lender Sourced Capital is out with a release claiming the UK property market could experience a double-digit rate of decline for property values. A recovery may take up to 5 years, according to the report.
The company says the once-hot market has ground to a halt as purchasers and sellers are unable to transact due to the lockdown or because of the risk of the unknown.
Sourced Capital reviews the historic price changes during the past recessions:
Early 1980s Recession
- Duration: 1.25 years
- Property Price Change: +8.6%
- Repossession Change: +440%
Early 1990s Recession
- Duration: 1.25 years
- Property Price Change: -1.4%
- Repossession Change: +616%
Great Recession of 2008-2009
- Duration: 1.25 years
- Property Price Change: -13.8%
- Repossession Change: +445%
Stephen Moss, founder and Managing Partner at Sourced Capital, said the current market may cause for concern for the moment but once “normality returns” it will be easily rectified – striking a positive note. The big concern is how long will the lockdown and recession endure and what will the new normal look like.
“We know from market data on previous recessions that such an event will cause property prices to drop and with current market conditions and values most similar to that of the previous recession, this could mean a drop of ten percent and upwards. Not only this, but those taking such a hit will be looking at a lengthy recovery time before their property regains its current value, a recovery that could stretch until 2025. That said, a decline in property values would be the preferable option when you consider that for tens of thousands of homeowners, the reality could be the repossession of their home.”