Its official… the housing market is open again
The Government has allowed Estate Agents and the housing market to re-open this week, which rather supports the idea that they see it being one of the key parts of the economy to reignite consumer confidence and therefore their expenditure.
Those who study the economy will know that consumers spending as they did prior to COVID 19 is absolutely key to getting the economy going again.
If they don’t spend because of job losses and or because they wish to build up savings, then all the hundreds of billions spent on protecting jobs and supporting businesses will have been in vain and we will be facing a very long recovery period.
If house prices then fall, then consumers will feel poor and will not spend at the same level on home improvements and will not want to spend on discretionary items such as restaurants, holidays, theatres, cinemas, sporting events, etc, etc. The early indications are that the housing market is busy, but we will not get to see the real picture for a few months. The first major headlines for the economy are not due out until the end of June when the official GDP figures for the second quarter are released. Current forecasts are for a contraction in the economy somewhere North of 35%, which would be a historical new record.
It is also worth noting the fact that the furlough scheme has been extended until at least October, meaning the true number of unemployed will probably not be known until early next year. This has been a deliberate, strategic move by the Government as they try to delay any bad economic data, in the hope that consumer confidence grows stronger before October.
Concerning house prices, the early indications are that sellers are only too willing to take an offer on their properties, with Agents with whom I have spoken to this week having offers in the region of 10% less than the asking price quickly accepted.
It is, of course too early to know what property prices will do for sure, but if they do start to fall as I personally believe they will, the Government may start to offer even more drastic measures such as reductions in SDLT, deposits paid for first-time buyers, and zero interest rates.
Obviously, seeing Government debt rise further is not desirable but they may, in the end, have no choice when faced with the biggest recession/depression in 300 years.
My advice to anyone looking to make an investment in property is to be patient and wait until we have a clearer picture of where the economy is going.
There will be some great opportunities in the future, that’s for sure, but unless you have to buy now, my advice is to wait and see what happens.
Footnote: ‘Our Government has a very unenviable task and are currently following international and historical protocol for the economy atm. They are currently trying to condition us as they always have done before and it is worth pointing out that all of their current decisions are based on what has happened before. The real problem we have here though is that this crisis is totally unprecedented and therefore everything that world Governments have learned at Oxford and Harvard, becomes irrelevant. Fascinating stuff though’.