Cast your minds back to 2008. Just a few years ago, after the boom that started from 2005, the property market came to an almighty halt, prices came tumbling down and the crash had taken it's grip. Now, with COVID-19 and lockdown having taken it's toll on the UK economy, we are once again in a recession. Why, then, is the property market proving so buoyant and homes selling so quickly? Simple...
Assessing previous recessions, a common characteristic before a crash is a long boom. We hadn't experienced a long or significant uplift in the market before Corona hit, so all indications suggest we were not due a downturn.
To compliment this slow house price growth we've witnessed in recent years, we are also blessed not to have fallen into the same trap that triggered the last crash, borrowing. We currently benefit from tougher and more responsible mortgage regulations whereby negative equity is less sensitive or, indeed, likely.
The next factor that one should consider is the fact that, although we're officially in a recession (two consecutive quarters of negative GDP growth) we've only got September left of the third and current quarter. In this current quarter we've gone back to work. GDP is most likely to have increased, in which case, the recession is likely to be already over!
The basis of this 'mini-boom' is good old fashioned economics. Demand is out-stripping supply. This is changing as more and more sellers are taking notice of the boom and getting their properties on the market. It's a race against time, therefore, for sellers to take advantage as more and more options are being made available to buyers with more properties coming onto the market. Sellers are increasingly suffering from increased competition, but as long as the demand is still there they can milk the opportunities.
The last factor... Brexit. The barriers to market (psychological) have been lifted as we have more clarity as to what's happening and the government's plan of action. This increase in confidence has meant that buyers and sellers that were previously waiting in the wings are now progressing with their home-move plans.
It's busy out there in the property market, and certainly buyers and sellers are all making hay. With the increase in unemployment and furlough schemes now being eased and brought to a close, it's fair to say that the pool of purchasers will soon dwindle and supply will shortly catch-up with demand, possibly even exceed it, pushing prices down. As we go into September, the sun will still be shining, so our advice to those thinking of selling is make hay now.
Our predictions are that the market will not crash, but certainly there's opportunity out there at this present time and the early signs of things changing are starting to show. It's not too late!