It used to be the case that global investment markets never sleep. But now it seems that the UK property market has also got on the wagon.
Roxana Mohammadian-Molina, Chief Strategy Officer at development finance and bridging lender Blend Network, argues that this has certainly been the case with property developers and investors who over the past few months have been silently upping their game and carefully watching the market as it has gone from strength to strength.
As a development finance and bridging lender to property developers across the UK regions, we at Blend Network are in a unique position to be able to feel the pulse of the market. From our conversations with developers and investors to our lending activity and the loan requests our team review on a daily basis, this all gives us a very good factual understanding of where the market is and a good feeling for where it may be heading to. So, what trends have we witnessed in the UK property market over the past few months, and what do we make of it?
Some pockets of the UK property market remain exceptionally strong
According to the latest nationwide housing market data, the average UK house price rose by 5.8% year-on-year in October following a 5% increase in September and a 3.7% increase in August. Yet the strength of the UK housing market in recent months hides a wide disparity between some very strong performing markets and some other relatively weak markets.
A detailed look at quarterly regional data suggests that parts of the north of the UK have been the star performers in recent quarters, even despite the pandemic. For example, the UK northwest saw a 4% growth in average house prices during the first 9 months of 2020 compared to the same period in 2019. In contrast, the UK as a whole saw only a 2.6% increase in average house prices during the first 9 months of this year vs the same period last year.
Demand for alternative finance from property developers and investors has seen a surge
We at Blend Network saw monthly records of lending during June, July and September, and so far in Q4 2020 are also on track to deploy a record amount of funding to property developers and investors looking to fund their projects.
We are not alone and according to P2P Market Data, a website that tracks peer-to-peer (P2P) lending activity across different markets, other alternative property lenders have also seen a surge in lending activity. The reason is simple. Amid the Covid-10 pandemic, many mainstream and high-street lenders have scaled back their lending activity, focusing on CBILS instead.
This has left a gap in the development finance and bridging market, a gap that has been quickly filled by alternative lenders such as Blend Network who due to their diversified lender base is in a very strong position to continue lending and deploying capital.
Property developers and investors are keeping a vigilant eye on the market
Judging by the conversations we have with our borrowers, property developers and investors all across the UK regions, as well as from speaking with auctioneers, lawyers, accountants, architects and other professionals involved in the property development lifecycle, the past few months have been “manic and “crazy busy”, as most would describe it.
Everyone seems to agree that property developers and investors have been silently upping their game and carefully watching the market as it has gone from strength to strength over recent months. Many people see the stamp duty holiday being extended beyond its current deadline of end-March 2021 and no one wants to miss an opportunity in this market.
Yet everyone agrees that in order to be able to snap good deals in this market, one thing is key: to have a good lender by your side who speaks the property developer’s language and understands the game. And this seems to also be the reason for the increased popularity of alternative lenders.