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  • Charter HCP Team

Our Take on it

The property market will drop to 0, land will be worthless, and it will never recover. The fundamentals that drive the market no longer matter! The population will stop increasing and the shortage of housing stock that the government is failing to deliver will no longer be an issue! The economic fundamentals of supply and demand will collapse and the skys will fall, people will not need homes in the post-apocalyptic future that awaits us post COVID-19! These are end times!


Sounds ridiculous right? Because we are fortunate to live in a country that has the fundamentals in place, due to a world leading legal system, financial backbone, infrastructure and government for us to know it is ridiculous to exclaimed “run and take nothing with you”. We can say with almost absolute certainty that the economy will bounce, markets will return, our population will rise and shelter, one of the fundamental human needs will be in scarce supply once again. From year 235 with the Crisis of the Third Century and the decline of Rome to the Bankruptcy of the Spanish Empire in 1627 and the financial crises of 2008, markets have been rising and falling since markets began. Never more than now have we been able to say for close to absolute certainty they will recover. Yes, stay inside, wash your hands, keep your distance and do not take unnecessary risk but remember the world will keep spinning. Do risk missing the opportunity of a lifetime, work now.


While the majority rush to buy toilet role and spam the minority wait to buy assets and make the most of a panicked market and lowest interest rates in history. When the masses shout “The end is nigh” the wise few hear “It’s time to buy”. As Warren Buffet said “Be fearful when others are greedy and greedy when others are fearful” and before Mr B muttered those words the familiar name Baron Rothschild said “Buy when there is blood in the streets even if the blood is your own”.


Let’s remember life before COVID-19, it wasn’t all rosy and it hadn’t been for a few years. “The fall in house sales has been led by London, Savills says, where its average prices have plunged by 32%” [1] The Guardian 08/08/2019. It seems like it is now no longer important but before the tightest restrictions were inflicted on the UK public since World War 2, we were going through the biggest political changes in European politics since the end of World War 2. After David Cameron threw his toys out of his pram when he didn’t get his way, we had Theresa May promoting “strong and stable leadership”. To do this she lost the majority, repeatedly had her bill rejected and then stepped down. The UK property market, that had pushed on since 2008 had lost steam due to a political arena that had turned in to a reality TV show base on musical chairs and the market was sceptical as 2008 was still sore and fresh in mind. This being said, market fundamentals were strong and exposure still relatively low.


The banks were clearly confident in the property markets’ stability in 2019 and had a bright outlook for the future as Lloyds and Halifax we two of the high street banks that were offering 100% mortgages to first-time buyers as covered by The Guardian and The Mirror (yuck)[2] in 2019.


Forbs had this to say “83% of those surveyed responding that they intend to continue with planned home sales or purchases this year despite the virus. It would seem that after several years of uncertainty over Brexit, and the recent election, buyers and sellers are refusing to put on hold their plans any further. This confidence looks set to continue as 69% of those surveyed responded that even if the coronavirus does become more widespread, they would not allow it to disrupt their plans”[3]


If none of this was exciting enough the Royal Family decided to jump into the drama with a recently married 35 year old moving out of his Granny’s house and giving up his pocket money and Andrew giving the most bizarre and damming interview of a lifetime. Then COVID-19 has really trumped the lot. Talking about Trump, do remember that the US almost started a war with Iran and has been in a trade war with China? Also remember it wasn’t long ago that the world was worried about the North Korean “Rocket Man”?

Through all of this the property market has moved through the mid-section of the cycle as predicted and according to a number of sources we are coming into the growth phase before the next crash in the next 5-10 years. [4]


Property development builds take on average around 18 months meaning it’s important to look at the position in 18+months’ time when the units hit the market. The chart below shows the how JPMorgan has tracked how financial markets react to similar crisis in the past. Professor Chris Whitty, England's Chief Medical Officer, said on March 12th 2020 that he expects that the UK would reach the peak of its coronavirus outbreak in about 10 to 14 weeks. We would therefore expect the peak of the coronavirus to reach its peak around late May this year. This means that we should expect financial markets to continue to struggle until then. After the peak, we would then expect the financial markets to rebound over the following 1-3 months.


So yes, put social contact on hold, work from home and in the future and let’s be honest, washing our hands should not be a new concept. Take the proper precautions, follow government advice but remember the markets will rebound, don’t miss the opportunity to lay the foundations of your future.


At Charter HCP we are best positioned and ready to finance your feature plans. We continue to actively look to fund projects and purchases of any size across the UK and abroad from £200k to up and over £5 billion. We work with you, consult and provide indicative terms asap with the ability to offer:


· Debt Financing

· Equity and Debt hybrid Financing

· Joint Venture Partnerships

· Business Expansion Financing

· Hard money

· Infrastructure Development Funding

· Construction loans

· Transactional Funding

We can provide funds quickly, so you don’t miss an opportunity. We are also working with a number of LPA receivers who are sending us sites to put to buyers across the UK. If you are looking for sites please get in touch.

We will survive COVID-19 so let’s ask the question: What’s next?



[1] https://www.theguardian.com/business/2019/aug/08/uk-housing-market-at-its-weakest-point-in-a-decade-brexit-says-savills

[2] https://www.theguardian.com/money/2019/jan/28/lloyds-unveils-100-mortgage-for-first-time-buyers - https://www.mirror.co.uk/money/halifax-mortgage-first-time-buyers-20049048

[3] https://www.forbes.com/sites/garybarker/2020/03/10/coronavirus-how-it-could-affect-the-housing-market/#520769fa564c

[4] https://www.ft.com/content/3d4650cc-214b-4347-9b23-299da810a2ec

Other useful links:

https://www.independent.co.uk/life-style/health-and-families/health-news/swine-flu-the-uk-timeline-1744570.html

https://www.showhouse.co.uk/news/how-will-coronavirus-affect-the-property-market/

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London,

EC4N 7BP

Tel: +44(0)2037005805

Email: info@charterhcp.com

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