According to The Bank of England, the country will enter a 15-month recession by Christmas. While this is worrying news for many businesses, the impact a financial downturn will have on the property market is far less predictable.
Despite UK house prices falling for the first time this year – experts attribute the 0.1% decline to summer distractions rather than deteriorating economic conditions. With increasing chances of another recession, will the property market continue a downward trajectory or regain its momentum? In this week’s blog, we’re discussing the future of one of the strongest sectors in the British economy.
A cause for alarm?
No economists have predicted an outright crash – so it’s worth noting that despite the doom and gloom, a scenario akin to the Great Recession of 2008 is highly unlikely. Alongside this, mortgage approvals remain well above pre-pandemic levels, indicating that many people still have the motivation to move. With unemployment low and vacancies high, the labour market remains reasonably strong.
Rightmove have stated that it still anticipates UK property prices to conclude the year 7% higher than in 2021, despite the general economic instability and worries that the increasing cost of living may plunge the UK into a recession. With the level of housing stock down by 39% when compared to 2019, it’s likely that the lack of supply will bolster prices. Although buyer inquiries are down 4% compared with 2021, they are still 20% higher than before the pandemic.
Buy now or later?
The housing market has proven to be very resilient, it’s therefore safe to say that even though uncertainty looms – UK property will weather the impending storm. If you can afford to buy, waiting for a dramatic drop in prices might prove fruitless, considering the long-term buoyancy of the sector. Generally speaking – property tends to rise in value over time, so by purchasing now, you’re likely to make a profit on any long-term investment.
Once the “Help to Buy” scheme ends in March 2023, we can expect the number of first-time buyers to diminish – and with harsher economic conditions, less owners will be looking to upgrade their property. Despite this, we expect the market to remain steady with a temporary single-digit percentage price fall – followed by a stable increase in the months to follow.
Regardless, it would be unwise to allow industry forecasts to fully influence purchasing decisions. Given the vitality displayed by the market throughout the economic turbulence of the pandemic, an astute investor would take most predictions with a healthy pinch of salt.
At Targetfollow, we have confidence in the UK’s robust property market. For six years, house prices have steadily increased – making the United Kingdom one of most valuable real estate markets in the world. For more of the latest news regarding our property sales and asset management projects, be sure to follow us on Facebook, Twitter and LinkedIn.