According to the Centre for Economics and Business Research (CEBR) house prices are forecast to fall by 14% in 2021. Whilst this is a bold prediction, this fall is expected to arise after the FCA’s stamp duty holiday ends and the full impact of the winding down job retention (furlough) scheme shows its true impact on the economy. Many economic commentators argue that house prices are being help up artificially, with pent up demand as many sellers hold off from coming to market. What does this all mean for the repossession market though?
Well, with regulators protecting those in urgent need of financial assistance, repossessed properties coming to market visibly stalled during 2020. Eric Lenders, managing director of personal finance at UK Finance, said: “Lenders are continuing to provide unprecedented levels of support to help customers through the Covid-19 crisis and have been working closely with the FCA to ensure that customers impacted by the new lockdown measures will be able to access the assistance they need, including being able to defer payments on their mortgages where this can help.”
However, these mortgage payment holidays and restrictions on lenders are coming to an end on the 31st of January and we, among others, predict that repossessions across the UK will gradually spike in the coming weeks following these changes . This spike in repossessions at the end of Q1 in conjunction with the forecasted house price decreases mean this year has incredible potential for the repossession investment market. Many investors will be able to enter the market way below market value and hold larger equity in the properties they purchase from day one, allowing fast capital growth as the market and demand lag recover towards the end of the year.
As many will unfortunately have no choice but to liquidate their assets, the spectre of forced sellers is looming over the property market and could bring an extremely promising housing ‘mini-boom’ as the market recovers towards the end of the year and property transactions skyrocket.
Although it might be too early to speculate, it could be interpreted that a decline in demand and a reduction of income due to unemployment, has forced some sellers to reduce their asking price. Whilst this may be bad for traditional sellers, repossession buyers have an incredible opportunity to achieve even greater below market value offerings on already discounted properties.
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