"The drop which followed the shock referendum result last summer was quickly recovered and this gives us confidence"
The significant drop in lending in Q3 of 2016 meant total annualised lending dropped towards the end of the year. However, with a significant rebound in Q4, as predicted, the market returned to growth at the start of 2017. The ASTL recently reported gross lending figures for their members at £780.2 in Q1, in line with £772.6m lending for Q4.
West One says steady growth is expected to continue throughout 2017, although the market "will still need to navigate some challenges ahead".
One of these challenges is the wider property market, which has shown signs of slowing in the first quarter of the year. According to Halifax, prices fell 0.1% in April 2017, making the average house price £3,000 below the December 2016 peak.
HMRC property statistics for March 2017 showed that, on a seasonally adjusted basis, the estimate for the number of residential transactions grew between February 2017 and March 2017 by 0.5%. The seasonally adjusted figure is 40.9% lower than the level recorded in the same month last year.
In addition, it is still unclear what effect Brexit will have. The market recovered quickly from the shock vote in June 2016, but the long term effect of negotiations and the final deal for the UK represents a great unknown, which could cause some investors to act more cautiously.
Stephen Wasserman, Managing Director of West One Loans, commented: “We’ve seen a rise in bridging loan volumes as investors turn to alternative finance. The increase among smaller investors fits with the overall picture of residential market growth despite a jitter at the higher end of the market. The drop which followed the shock referendum result last summer was quickly recovered and this gives us confidence as an increasing number of commentators moot a slowdown in the housing market. Indeed, we continue to predict that the bridging market will go from strength to strength. Market moves present an opportunity for investors and those looking to capitalise on this will be seeking out the financing needed to enable them to do so.
“Whatever happens next, the industry needs to be ready with diverse and flexible financing options for property purchasers. The bridging sector has seen a 5-fold growth in lending since 2011 and is well placed to take advantage of economic fluctuations, being able to adapt to changing needs as and when they emerge.”
