UK property market is slowing down but freezing real-estate lending will not solve the crisis
Chairman and CEO of West End-based Hilltop Credit Partners, Paul Oberschneider, outlines how this is not the time to recant from real-estate lending but to maintain business as usual…
The world economy is suffering a severe downturn, probably worse than the 2008 crisis and unmatched by anything in history aside from the Great Depression. In the pre-pandemic months, the housing market was exhibiting a very strong underlying momentum in wake of the decisive general election results, with a sharp uptick in sales and price growth across the UK. An industry report also showed how the number of sales agreed in four weeks up to early March were up by an astounding 17.8 per cent — the highest at this time of year since 2016. However, the pandemic and the ongoing lockdown has put this recovery on hold, with sharp near-term reductions in activity expected.
Not surprisingly, real-estate lenders have adopted a bearish attitude and are pulling back from the market. This situation is set to widen the funding gap in the market and further aggravate the housing crisis in the UK. To put the record straight: Shortage of affordable housing will continue and lenders should treat this shift as an opportunity to continue supporting developers with a strong downside protection. Market uncertainty is real, but lenders must not forget that the real-estate sector is neither the cause nor the centre of the problem.
At Hilltop, we stay committed in supporting SME developers. Whilst we have tightened our underwriting criteria, we are continuing to fund and are poised to disburse over GBP75 million in the coming months. We remain focused on funding high-quality assets and developers.