logo
logo
Sign in

Biggest fears of investors when buying a UK property in 2020

avatar
Property Classifieds
Biggest fears of investors when buying a UK property in 2020

Property investors are worried. It’s not surprising given what is going on in the world right now. But what exactly are they worried about and are these fears justified? Here we take a closer look at the biggest fears of investors in 2020 and try to establish how the UK property market will cope in the coming weeks and months.

Is a recession coming?

Many investors are still reeling from the shock of the 2007-08  financial crisis. A lot of people were hit badly at this time, a consequence of being overconfident and not being able to see the threat of what was coming. As a result of this, investors are much more cautious about a similar event reoccurring. And given what is happening in the world right now, there are very legitimate fears that another recession is coming.

The Covid-19 situation has had, and will continue to have, a huge impact on the UK economy. Jobs have been lost, businesses will be affected, and the overall economy will suffer as a result of this enforced period of inactivity. So, it is likely that a recession will follow.

However, there are differences between this and what happened in 2008. Back then the crisis was caused by an over inflated mortgage bubble in the US. Lenders were handing out money for property investment that had no chance of being paid back. When this bubble burst it sent shock waves through the global economy. Everything was propped up on bad debt and it was all intrinsically linked to the property market, which understandably took a big hit.

This time, however, the property market was in good shape. Investment over the past ten years had seen steady growth, and tighter lending restrictions meant that there was less risk. Obviously, the last few months have had an impact but the green shoots of recovery are already beginning to show. Prices have rebounded as the lockdown period is eased and more buyers are keen to get out there and make an investment.

There have been some interesting developments. London has been the slowest area to recover but this is very much in keeping with the trend that was happening before the virus hit. Property prices in the capital have been very high for some time and experts had been predicting a fall and for other areas of the UK to catch up and level out. It seems like this is what has been happening.

With the market getting back up and on its feet again, investors should start to feel more confident that their money will be safe. This will hopefully breed more confidence in the coming months and avoid the recession being too serious in the property market.

Is the debt sustainable?

This is another of the biggest fears of investors in 2020. As a result of the pandemic, everyone has been borrowing. This has happened at a governmental level. In order to meet the furlough pay and to help keep self-employed people afloat, the government has had to borrow a huge amount of money. There are serious concerns that this level of borrowing is unsustainable.

In order to pay back this money, it looks like there will be tough financial times ahead for all of us. This money will need to be paid back and this will happen in the form of increased taxes.

People have also been borrowing at a personal level to see them through the tough times and this could all point towards a debt crisis in the coming months and years. Understandably, this is a concern for investors. However, the debt is manageable and should not put you off investing.

READ MORE....

collect
0
avatar
Property Classifieds
guide
Zupyak is the world’s largest content marketing community, with over 400 000 members and 3 million articles. Explore and get your content discovered.
Read more