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July 28, 2017
The first estimate of GDP in the second quarter of the year emerged this week and it didn't make for great reading.
With growth of just 0.3%, the Office for National Statistics declared that the UK economy is undergoing a ‘notable slowdown’.
After output of an even more miserly 0.2% in the first three months of the year, the economy is in one hell of a rut.
One of the major drags on the economy in the second quarter was the poor performance of the construction sector. It contracted by 0.9%, something that everyone involved in the property world should take note of.
Another warning shot was delivered just 24 hours after the GDP data in the form of a Foxtons profit warning. The London-focused estate agent said profits had plummeted by nearly two thirds (64%) in the first half of the year.
What's very clear from all this is that the property market is looking very vulnerable in the current climate of political uncertainty and economic stagnation.
Storms clouds are starting to gather over the UK housing market and all the major house price indices show that values are coming down slowly but surely, especially in the capital.
Against this backdrop, buyers, brokers and lenders need to be increasingly vigilant.
Within the specialist lending space, brokers should be doing a little bit more duedil than normal on the lenders they are considering approaching.
How experienced are they, have they been through an economic downturn before, how robust are their funding lines, and have they priced their current book of loans for risk?
If the market continues on its current trajectory, many lenders who entered the sector for a quick buck could quickly find themselves out of their depth.
And if that happens, ensure you’re not dragged down with them.
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