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COVID19: Is Now a Good Time to Invest in the UK?

by Nikki Dale -

It’s not been plain sailing over the past 12 – 13 months that’s for certain; the coronavirus pandemic has affected many aspects of our daily lives.  Some of these affects are temporary, while others are, or we hope are, here to stay.

It’s been a learning curve, a chance to reflect, and no doubt a humbling time for many.  We now are all hopeful and thankful for the fast vaccine roll-out in the UK, and by Q3, maybe Q4 2021, pray that life will largely resemble – life as we knew it.

The UK has seriously faced its share of uncertainty over the last few years. From the Brexit referendum, the general election in December 2019, a post-Brexit deal, and from February 2020 the COVID-19 pandemic.

The latter caused the UK economy to have its biggest slump on record, between April and June 2020, as the first national lockdown pushed the country officially into a recession. The economy shrank 20.4% compared with the first three months of the year. Household spending fell as retail and hospitality were ordered to close, and factory and construction output also dropped.

What to invest in, tailored to your appetite for risk?

Seeing the financial services markets being put through their paces was daunting for everyone.

The global stock market experienced a plummet in March 2020.  Experts urged and advised investors to look at their investment options and check their portfolios were recession ready.  Rebalancing was the consensus, lesson the high-risk portfolios and diversify.  Look at your investment sectors and look towards defensive asset classes – such as adding a property type investment – which has become so diverse itself over the years, with products that don’t entail buying physical bricks and mortar, that still offer a high annual return.

Hopefully, in the last 12-months or so months, investors have not panicked and reminded themselves why they became an investor, and what their investment goals are long term.  Savvy investors would have taken stock of their portfolio when the pandemic crisis hit.

Through every economic downturn investment experts also often express a ‘stick to your long-term investment goals’ strategy.   Rational and well-advised investors do not tend to jump out at short term volatility or slowdown in investment markets or sectors – they rather look for the opportunities it provides.

During times like these the ‘bigger picture’ is key.  Investors trying to time their way in and out of various investment sectors or stocks, for everyday retail investors, is often beyond range.

Is past performance a gauge for future certainty?

In this health-led economic downturn we are living through, arguably less precedents have been observed when looking back at the recessions in previous decades, including 2009. Meaning some investments and sectors that were dubbed countercyclical have not necessarily stood up so strongly this time round.

However, what the last 13-months has shown us is how robust the UK property market is.   There has been much support from the government throughout the pandemic for households, business, and public services – but the property market without a doubt has pleasantly surprised us all.

The property market during the COVID-19 pandemic  

The first UK lockdown brought total uncertainty and pessimistic projections to the property market in March/April 2020, during which time it was under a full two-month closure.

However, when the property market re-opened in May 2020, it opened with a bang. Pent-up demand overwhelmed the sector, there wasn’t anything directly affecting property transactions in terms of government restrictions, but the safety measures introduced caused transactions to be slow, lenders pulled and reduced their products and capacity and solicitors had to adapted to working from home.

Still, this didn’t put investors and home buyers off, and UK property has remained a popular investment choice throughout.

After the rollercoaster year of 2020, it certainly tested the patience of home buyers, landlords and property investors.  But in the end, it was all worth it, with the housing market finishing last year on an absolute high!  House prices rose to a six-year high according to Nationwide building society, rising 7.3% by the end of 2020.

The governments surprise incentive of a Stamp Duty Holiday (July 8, 2020) definitely spiked even more movement in the sector.  In terms of big SDLT savings this benefitted the primary residence house-movers and first-time buyers mainly, but even buy to let investors could save hundreds, if not thousands of pounds on their purchases.  With the extension of the Stamp Duty Holiday, announced in the March Spring budget, until September 30, 2021, the property market has not experienced the slump predicted by so many.

There was such a mixed bag of property growth predictions as we entered Q1 2021, which have no doubt been updated by industry experts every time the government has extended the end date of one of its many support schemes, including the SDLT holiday.  Its potentially too early in the vaccine roll-out plan to predict what will happen later this year, but …

READ ARTICLE: The Property Market: what to look out for in 2021

… now is a great time to invest … in the right product … for you!

The Bank of England has predicted a fast recovery for the economy, as vaccines are rolled out across the UK.

As we start to slowly come out of Lockdown 3 and restrictions start to ease and businesses re-open, even the sectors that have been affected by the pandemic will regain their pre-COVID-19 levels.

Shared accommodation forecast is expected to see a surge in demand this year as national and international students return to Universities.  These sectors now have the potential to thrive as the economy starts to recover, life starts to return to normal, and we see a post-pandemic view insight.

With a light at the end of the long tunnel it’s time to look at strategies to move forward during this recovery period and take advantage of opportunities of sustainable investments that provide a stable return.  This could be buy-to-let to save on the extended Stamp Duty Holiday.  Or the expected surge on purpose-built student accommodation in 2021 or how investors are finding recovery potential in property shares.

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