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Home > News > London Housing – Coronavirus impact Where do I put my money?

London Housing – Coronavirus impact Where do I put my money?

Thursday, March 19, 2020

Stock markets are whip lashing with 10% daily fluctuations both down and up, signifying absolute uncertainty as to what the future holds as countries seek to isolate themselves.

This whiplash of fluctuation in the stock market is likely to stay with us for a few more weeks until a sense of order emerges based on the Coronavirus crisis gradually stabilizing.

There is a massive flight of capital to cash and gold, natural havens for security.

However the very best option of all, for investors, is now the property market.

It was reported by Capital Economics in their research that Coronavirus precipitated a 90% drop in property transactions for three weeks, in 30 major cities, in China.

This sort of window has to create buyer opportunity if replicated now in the London market.

Perfect scenario while people are slow to move during this period we can enter the market and have choice of product, because others are slow to react.

The reasons to get in before we see the inevitable upward surge in prices, later this year, once Coronavirus fears stabilize, are threefold:

Currency

The £ Sterling was already low due to Brexit fears triggering a four-year slide.

The first two weeks of March has shown a collapse in the £ Sterling from 1.31 to US Dollar to 1.25 to US Dollar.

This is a huge buy signal for overseas investors to get into £ Sterling now.


Budget

Rishi Sunak gave us a watered-down budget in respect of property.

Manifesto promise of a 3% surcharge on stamp duty dissipated into a watered down 2% in 12 months’ time ….. maybe?

12 months represents double the warning time that George Osborne gave us buyers in April 2016 when he brought in a surcharge then.

Sunak clearly does not want any tax on overseas buying to “drag” the market and listening to Boris Johnson pre-election, he clearly wanted to see stamp duty removed.

The Daily Telegraph reported this week that “Sunak’s delayed, watered down tax could act as a stimulus this year” (To the property market).


Interest Rates

The Bank of England dropped base rate a half percent, literally a few hours before Rishi Sunak’s budget – a very deliberate move.

This now makes the base rate the lowest in history – ¼ of one percent.

Immediately banks followed the lead:

HSBC announced that they will follow, with a cut in their rate from 4.19 pc to 3.69 pc on April 1st, a couple of weeks away.

Nationwide, NatWest and Santander announced that their mortgage rates are “under review” – expect more cuts to follow.

A drop-in currency value against US Dollar, an unprecedented cut in £ interest rates and a kind budget window, have created the perfect window of buyer opportunity for overseas investors seeking the stable platform of London property investment.

To see GIHLondon latest London projects look at www.gihlondon.com

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