CapitalStackers Update On COVID-19 28th March, 2020
So how is it going as we crawl toward the end of the first week of lockdown?
Are the hands of your watch moving as slowly as mine? And pure irony, isn’t it – as soon as Boris tells us to stay at home, it stops raining and out comes the sun?!
The vast majority of us are adjusting to home working and getting on with ‘social distancing’. Those businesses that are allowed to work as ‘normal’ are getting on with that too.
Except the construction industry has come under intense fire for keeping building sites open. At the beginning of the week, the media’s attention was focused primarily – if not wholly – on London. Candid shots of a crowded Tube and big, tight construction sites in the’s centre featured high on news editors’ agendas alongside calls from the London Mayor and Scotland’s First Minister to halt construction altogether.
Thankfully, the Government has held its nerve, for now at least, and hundreds, if not thousands, ofhousebuilders are continuing to do their level best to keep the home fires burning. And with safety at the top of the agenda.
We’re going to come through this some time in the not too distant future and in the meantime it’s imperative that we fight hard to keep as much of the economy going as is humanly possible. The point is made very persuasively here by Jamie Blackett of the Telegraph.
Those keyboard warriors who have been sniping at small builders would be better off directing their ire at the hordes of ‘long distancing’ walkers descending en masse to the same locations and the parents who allow their kids to roam unchecked. They are the ones posing a real danger to everyone else’s efforts to #flattenthecurve.
Some of the national housebuilders have stopped building but there’s a suspicion the shutdown is more to do with the ability to sell finished product during a lockdown than the working practices on site. The Construction Leadership Council is all over the latter like a rash. It, and other professional bodies, have circulated comprehensive site operating procedures.
Certainly, all the contractors on sites we are funding are on the ball. Site meetings are virtual, hosted on Skype or Teams or Zoom with monitoring surveyors conducting site visits outside normal construction hours. It’s sensible, measured, meets Government guidelines and is safe. There is certainly no more risk than doing the the supermarket shop.
This Insider article about a regional housebuilder serves as a fine counterpoint to the stance being adopted by some of the nationals as reported in Property Week. By the way, access to Property Week online is now free until 19th April in case you want to read more.
Disappointingly, some of our borrowers are reporting difficulties with the supply chain. Builders’ merchants and timber factories going into lockdown isn’t helping and will only serve to push out build programmes. We’ve reviewed and remodelled all our deals to take this into account.
I’m going to finish this blog with a link to someone else’s on the basis it’s good to finish with something more upbeat. Earlier this month, Savills revisited the housing market forecasts they penned in November last year, concluding that market fundamentals continue to underpin their medium term view.
They subsequently published further coronavirus opinion after the lockdown in which they expect short term price falls in the order 5% – 10%. You can read more here.
Oh, and anecdotally, it’s interesting to note that since this kicked off, we’ve had just one investor looking to sell a loan participation in our(that’s a rare event given most choose to stay in for the whole ride). It was posted late yesterday and went under offer this morning. Make of that what you will, but I think it’s a strong sign of underlying confidence.
4thWay editor's note: Savill's has a very inconsistent record of forecasting property prices – just like every other property forecaster! Don't rely on forecasts to make your decisions; instead, learn how to build a margin of safety into all your investments. In P2P lending, this usually means ensuring that, property and interest rates are sufficient for hard times.
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