This week it was announced that the UK is officially in recession. So, what does this mean for you if you’re planning to move?
During a recession when finances are tight job security is in question, many are cautious about buying a new home. However, this is a very unusual time for everyone in the UK – the likes of which we have never seen before.
The property market came to a standstill in March and went off with a bang when it reopened on June 29th . It was feared that house prices would crash but to date, the opposite has happened. The recession is a result of a public health crisis and not a financial one, so the financial system isn’t at a standstill as it has previously been. The government has taken unprecedented steps to protect jobs and prop up the housing market. Estate Agents have reported a huge upsurge in interest in properties and new seller enquiries and property portals have reported incredible visitor stats since the start of July.
What’s more, in July it was announced that LBTT would be waived for all properties up to £250,000 until March 2021 to further incentivise those considering moving and the Help to Buy scheme has been extended. There has been restored confidence in the market and transaction figures have rebounded – with a particular rise in the purchase of first homes and newly built properties.
The concern surrounding buying a home during a recession is that house prices may fall after a property purchase leaving buyers in negative equity. There’s also a fear that the Furlough scheme has delayed the number of job losses and that when the scheme ends there will be a raft of redundancies.
One thing is for sure – house prices are steadily rising and mortgage companies are bringing back products. House prices fell in 2018 due to a very specific lack of funding in the mortgage market. This isn’t the case this time so we believe that property will still be one of the strongest investments you can make. At present, there is an imbalance between demand and supply which is putting upward pressure on prices at the moment, and as a result we have seen the price growth for UK homes rise to 2.7% in June, up from 2.4% in May. We see this trend continuing for the foreseeable future.
If you’re buying a new home, you may prefer to delay your purchase and wait to see how the recession plays out but the danger is that if your job is secure and you have the funds and meet the lending criteria, now is a great time to secure an attractive mortgage rate.
If you are thinking buying, make sure you have the right advice and don’t miss out on the LBTT break and low mortgage rates. Talk to us to discuss your circumstances before making a decision as we may able to help you decide what’s best for you.