Market analysis by the debt advisory specialists, Sirius Property Finance, has shown that while the market size of building societies and banks has shown positive growth over the last year, it remains -5.2% down versus the pre-pandemic peak.
Sirius Property Finance analysed the market size of the banking and building society sector based on revenue and how it has changed since the pandemic.
The figures show that the combined market size of both sectors sat at £110.6bn a decade ago (2013). This combined market size increased considerably in the run up to the pandemic, hitting a peak of £131.5bn in 2019 – a 18.9% increase versus 2013.
However, when the pandemic struck, this market size declined considerably, falling by -6.1% between 2019 and 2020 and a further -14.7% between 2020 and 2021.
As a result, the total combined market size of the banking and building society sectors totalled just 105.3bn in 2021, the lowest total seen in the last decade.
Last year saw a slight resurgence as both sectors saw an increase in market size during 2022, with their combined market size increasing by 4.7% to £110.2bn. However, this still remained some way off the pre-pandemic market, sitting -16.2% below the peak seen in 2019.
This growth is forecast to continue in 2023, with total market size estimated to increase by 13.2% to £124.8bn, although again, this will mean both the banking and building society sectors will be yet to return to full pre-pandemic health.
Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates said, “The pandemic brought a significant level of volatility and instability to global capital markets and the impact of this is clear to see when analysing the market size of the banking and building society sectors within the UK.
What’s more, while normality has returned and positive growth has resumed, the Covid hangover certainly remains, with both sectors struggling to return to their pre-pandemic peaks.
For those considering a commercial or residential property purchase, this may mean a greater level of difficulty when looking to secure finance from mainstream lending options, particularly in an increasingly difficult market as we’re seeing at present.
However, there remains a wealth of alternative paths to the big banks and building societies when it comes to securing property finance and ones that are likely to offer the flexibility needed to negotiate the current landscape.”