The UK property lending market looks “extremely positive” with property prices rising and demand set to grow.
According to Jason Ferrando, chief executive of property-backed peer-to-peer lending platform easyMoney, 2024 will see a property market recovery after a prolonged period of stagnation. This will drive interest in property-backed investments such as easyMoney’s Innovative Finance ISA (IFISA).
“The year ahead is looking extremely positive given the economic turbulence of the last year and the fact that interest rates still remain considerably higher than we’ve seen in recent years,” says Ferrando.
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“While we’re unlikely to see the market accelerate at the same pace as we did during the pandemic, we expect a slow but steady rate of growth to persist as demand continues to outweigh supply.”
The UK property market has been in turmoil since the infamous mini-Budget of late 2022, which brought a great deal of uncertainty to the UK economy and had a knock-on-effect on the property market. Furthermore, rising interest rates put pressure on buyer purchasing power, causing property demand to slow.
“2023 certainly posed a more challenging year for the property market,” says Ferrando. “As a result we saw house prices begin to decline with property transaction numbers falling consistently between January and July of last year.
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“However, with the base rate being held at 5.25 per cent since August of last year, stability has started to return to the market and we’ve already seen concrete signs that market health is improving. This growing market confidence has been helped by a reduction in inflation which sat at four per cent in January versus 10.1 per cent a year previous.”
This uplift in market activity is also starting to show with respect to house price growth. The latest sold price data from the Land Registry shows that house prices climbed by 1.4 per cent in December of last year, while mortgage approval house prices from Halifax and Nationwide show that in February of this year house prices were up by 1.4 per cent and 1.7 per cent respectively, year-on-year.
“Investors can take advantage of improving market conditions in many ways,” explains Ferrando.
“Utilising property-related investments via alternative investment vehicles such as an IFISA is one way of doing so, allowing investors to invest from a far lower entry point than the cost of purchasing a property.
“Other options include property funds, REITs, or by purchasing shares in property related companies such as housebuilders or agents.”
Investors can open an easyMoney IFISA with as little as £100, and can start investing in property-backed loans paying interest rates of 5.53 per cent and higher. Ferrando’s team has a combined total of more than 100 years experience in the property market. Ferrando himself has been in the lending space for 30 years, with a flawless track record thanks to his attention to detail.
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“easyMoney has a diligent and robust underwriting process,” says Ferrando. “We have third party valuations on every deal. We have an experienced credit committee that looks over every deal and tranche payment individually, and we have a team of professionals on the ground visiting sites regularly to keep up to date with the progress.
“Our loan servicing team is in constant contact with the borrowers to make sure they are happy and are on target.”
With this focus on due diligence and long track record in the sector, easyMoney is well placed to take advantage of any upcoming property market growth.
