Although transaction volumes may recover at pace following the reopening of the market, buyers may use this opportunity to renegotiate with vendors.
Although transaction volumes may recover at pace following the reopening of the property market, there is a chance that buyers may use this opportunity to renegotiate with vendors, warns mortgage broker Private Finance.
Commenting on HM Revenue and Customs' (HMRC) property transactions data for April, which showed a month-on-month drop of 46.1%,Shaun Church, director at Private Finance, said: “These latest figures expose the true impact the lockdown has had on the UK’s property market, with the government’s decision to freeze the bulk of transactions to reduce the spread of the virus resulting in the market hitting the wall hard."
However, Church said that latent demand might see a speedy recovery following the easing of lockdown restrictions.
He said: “Transaction volumes may recover quickly following the government’s decision to reopen the property market in England.
"Huge pent-up demand could be released as prospective buyers rush up to pick up their pre-lockdown property searches, while those who put their purchases on ice may try to rapidly push them through.”
Nevertheless, the uncertainty of the economy and its potential effect on both confidence and average house prices might create an element of undercutting that could cause issues within the property market.
Church added: “Friction in the market may intensify as buyers attempt to negotiate lower prices with their vendor.
"This may fall on deaf ears as sellers seek to crystallise pre-lockdown valuations.
"If pushed too hard, sellers may pull out of deals altogether, resulting in overall transaction levels stagnating.
“There are signs of good news for borrowers, with lenders now returning to the market with higher [loan-to-value (LTV)] offers.
"However, the landscape has changed from when lenders approved original mortgage applications.
"Many borrowers will either have been furloughed, taken salary cuts or suffered sharp falls in their income.
"The hope is that any tighter credit controls that may be applied will be temporary measures and that lenders will take a pragmatic view in the new environment.
"Ultimately, we should see things improve as the market – and the wider economy – begins to reopen."
