Currently, the UK property market is experiencing a mini-boom. However, this could change given that the country has now moved into a recession. Paul Howells, CEO of Accumulate Capital, offers his thoughts on the matter.
Every day, another spanner seems to be thrown into the workings of economic engines around the world. Gold prices are suddenly up and before you know it they’re down. Governments are printing money like there is no tomorrow, huge bailouts and loans are being handed-out right, left, and centre and many workers are being paid to stay at home.
At some point in time, all of this had to have an effect on a country, and in the UK’s case, it is now with it falling into an official recession.
Some leading commentators are already stating that this is no longer the case based on the current increase in economic activity and I agree with them based upon the latest data. However, this doesn’t help the mindsets of potential buyers and sellers.
Over the past couple of months, the UK property market has bounced back with a vengeance, the two words commonly used to describe it is mini-boom. But, will the shadow of a recession put a halt to this? Gloomy headline-grabbing news in the press and contradictory views are far from helpful to many people embarking on what is likely their biggest ever purchase.
The basic fundamentals underpinning the property market are still in place; more buyers than stock and ten of thousands of people seeking to exit built-up urban areas for the tranquillity and open space found around small towns and villages.
Do I think the recession will derail the property market? No. I think that things will continue as is, possibly at a slightly lower pace over the shorter term. And I still cannot foresee many pundits predictions of nigh double-digit falls in property prices coming true.
But what do I know? I no longer work in the property or finance industries. However, Paul Howells, CEO of Accumulate Capital does and here’s what he has to say on the matter:
“The recession will pose challenges, but there is good reason to be hopeful. For one, even though there have been two-quarters of economic downturn, the past two months has actually seen the UK economy return to growth. What’s more, the Government has been actively supporting the interests of businesses, consumers and investors, and this should hopefully provide the necessary safeguards to overcome the immediate financial implications of the recession. When it comes to property, this includes the mortgage payment and stamp duty holidays.
“Last week, it was confirmed that house prices are rising in the aftermath of the lockdown, with enquiries and transactions spiking as a result of returning buyer demand. The Government has also pledged over £5 billion investment into infrastructure and property. This will no doubt, provide a much-needed boost to national productivity and economic growth. As a result, we are likely to see a rise in new construction projects, which will help create new jobs and also offer new investment opportunities.
“For now, at least, the big question is how long a recession is likely to last for? At the moment it is difficult to tell. Nonetheless, should the COVID-19 pandemic be contained, and the post-pandemic recovery continues, the end of the recession could come sooner rather than later.”
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