In July, it was officially announced that the UK was in the midst of another recession. It is now being reported in the mainstream media that this could continue until Spring next year. Many factors influence when an economy can enter a recession from simple things like higher interest rates and falling consumer confidence, to more complex “Black Swan events” which are unexpected happenings, such as global pandemics. If a recession goes on for too long, this can lead to a depression, which is characterised by sweeping levels of unemployment and buying and selling coming to all but a standstill.
This new recession in the UK will have an impact on the economy but to what extent is currently unclear. So what does a recession mean for the property market? We have seen buyers getting great deals during past recessions when the government stimulated the market by offering 100% mortgages — this is where no deposit is required, which are often the biggest hurdle for many first-time home buyers (let’s not forget that most rentals are more expensive than paying off a mortgage!). This ensured that a lot of people were able to buy a home—something many would not have been able to do if they had to save for a deposit. Buyers could see an opportunity like this arise again, or other such market-stimulating incentives.
We have already seen some measures put in place to incentivise property buyers with Chancellor Rishi Sunak’s implementation of the stamp duty tax holiday. Stamp duty tax is usually paid when someone is buying a property or land over a certain price. This
However, there is also the risk to sellers. Many people during economic downturn find that they need to sell up assets and other unnecessary possessions to survive in a climate of uncertainty. This, combined with the potential of properties losing value and fewer people being willing or able to buy property, could lead to some properties being sold at low prices out of sheer desperation.
Consequently, there could also be a market crash, leading to a HUGE reduction in property values. Great news for buyers, bad news for sellers. Whichever camp you fall into, your ideal scenario is not necessarily aligned with others. You may wish to hold out for a crash so you can secure a better property at a more affordable price. Or as a seller, pre-empting a crash and selling before your property loses value may be more beneficial than riding out the economic downturn and waiting for things to pick up again following plummeting values.
Whatever your status and goals, a trusted, knowledgeable and experienced real estate expert is incredibly valuable. Whether you’re looking to buy or sell, contact the Kings Real Estate team for the best advice possible. Our specialists can spend time discussing your aims and advising you on the best course of action, specifically tailored to you and your situation.
Contact us today on 0116 352 7012 to get started, or email us at firstname.lastname@example.org