{"id":6032617,"date":"2020-08-13T09:30:08","date_gmt":"2020-08-13T08:30:08","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=6032617"},"modified":"2020-08-13T09:30:08","modified_gmt":"2020-08-13T08:30:08","slug":"what-a-recession-could-mean-for-the-uk-housing-market","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-us\/2020\/08\/13\/what-a-recession-could-mean-for-the-uk-housing-market\/","title":{"rendered":"What a recession could mean for the UK housing market…"},"content":{"rendered":"

The UK economy is officially in recession for the first time since 2009. Certain sectors have felt the pinch much more than others, so where do we stand now in the housing market?<\/strong><\/p>\n

Yesterday the Office for National Statistics<\/a> (ONS) revealed that the UK has experienced two consecutive quarters of economic decline. This technically puts the UK economy into its first recession in 11 years, when the global financial crisis took its toll.<\/p>\n

The figures show that the economy contracted by 20.4% between April and June as the effects of coronavirus<\/a> became apparent. The services sector, retail and hospitality have suffered in particular as shops, hotels, restaurants and schools all closed.<\/p>\n

However, the ONS also revealed that there were already signs of recovery in June, with 8.7% growth. Since March, the government has implemented a range of measures<\/a> in an effort to boost the economy. Chancellor Rishi Sunak has indicated there will be more in the pipeline in autumn.<\/p>\n

Housing is not the worst hit sector<\/h4>\n

The last recession, sparked by the global financial crisis of 2007-2009, was quite different to the current one. The housing market, shares and investments took a big hit in the crash 11 years ago.<\/p>\n

While any economic uncertainty will affect the property outlook, so far house prices<\/a> and forecasts have remained buoyant. There was a significant dip in transactions in the short term, but these have now begun to pick up. Buyer demand<\/a> is soaring, while the rental market<\/a> is also seeing heightened activity.<\/p>\n

One major factor in the housing market’s favour is the state of the sector pre-coronavirus. Thanks in part to the “Boris bounce<\/a>“, the end of 2019 and beginning of 2020 showed good growth in the sector. Property is an asset that people will always need, whether buying or renting, and it is thought that this will stand it in good stead for recovery.<\/p>\n

Stimulating the market<\/h4>\n

Last month, Chancellor Rishi Sunak made a major change to the stamp duty threshold. All residential properties worth up to \u00a3500,000 are now exempt from the tax. This could save homebuyers as much as \u00a315,000 on their purchase, and the scheme is set to run until next spring.<\/p>\n

The stamp duty holiday has already proved extremely successful in stimulating the market. According to a number of reports, including one by Savills, buyer enquiries have increased significantly.<\/p>\n

In the latest\u00a0house price index\u00a0from Halifax, house prices increased by 1.6% from June to July. This represents an annual change of +3.8% from 2019, showing the start of a \u201cmini-boom\u201d in the market.<\/p>\n

According to Halifax managing director Russell Galley, the government\u2019s stamp duty cut has supported the post-lockdown spike. He says that confidence is currently growing and the\u00a0future<\/a> looks \u201cbrighter than expected\u201d.<\/p>\n

The current low interest rate environment also means now is a good time to borrow for property<\/a>. While savers may be seeing extremely poor outcomes from their accounts, those taking out new mortgages or remortgaging now are securing very low rates and competitive deals.<\/p>\n

The property cycle – how it affects investment<\/h4>\n

The most important aspect of any property investment is its longevity<\/a>. This, therefore, should be the key focus for any investment strategy. This applies to homeowners equally; no one aims to buy a home that they don’t expect to go up in value ultimately.<\/p>\n

One theory on the long-term nature of property is the “18-year property cycle”. Economic consultant Fred Harrison first described this in his book Boom Bust: House Prices, Banking and the Depression of 2010.<\/em><\/p>\n

The book, published in 2005, accurately predicted the financial crash of 2007-2008. By looking at historic property prices<\/a> over the last couple of hundred years, Harrison recognised that the property market runs in a fairly predictable 18-year cycle.<\/p>\n

According to his ideas, the cycle consists of a crash and then a gentle recovery phase. There is then a natural correction in the market before a boom occurs over the next few years. A crash then follows as the whole process begins again.<\/p>\n

There are opportunities to be had at every point in the cycle, from the boom period to the crash. Importantly, rents<\/a>\u00a0are seldom significantly affected in the same way by boom and bust patterns, as the demand remains relatively constant, so sensible\u00a0buy-to-let investments<\/a> will always reap rewards. Rental demand<\/a> is currently extremely high, and coronavirus is unlikely to affect this. According to the theory which has been proven over time, prices will always recover as the next cycle begins again.<\/p>\n","protected":false},"excerpt":{"rendered":"

The UK economy is officially in recession for the first time since 2009. Certain sectors have felt the pinch much more than others, so where do we stand now in the housing market? Yesterday the Office for National Statistics (ONS) revealed that the UK has experienced two consecutive quarters of economic decline. This technically puts… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":6032633,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[59,6],"tags":[27,487,113],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/6032617"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/comments?post=6032617"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/posts\/6032617\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media\/6032633"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/media?parent=6032617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/categories?post=6032617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-us\/wp-json\/wp\/v2\/tags?post=6032617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}