Date Published 14 May 2020
Back on the 2nd March I published our monthly update on the housing market. Based on the figures from February and a buoyant start to the year it was full of positivity and I went as far as to say, 'I think March will bring record prices.' It's fair to say this has not aged well! Three weeks later the Government effectively shutdown the housing market.
Seven weeks on and the Government have eased restrictions allowing sales and lettings agents to begin operating again. Although, rightly so, there are very thorough guidelines in place that we will be adhering, so it is not quite business as normal.
During those seven weeks we've seen the number of new properties listed for sale reduce by a whopping 87% compared to the same period last year - Hardly surprising given that the country has been in Lockdown. Although restrictions have now reduced, it's still difficult to gauge if we'll see a sudden uplift in properties coming to the market. The public are right to be concerned about the spread of coronavirus and the potential of a second spike in cases, so just because we're allowed to conduct viewings and valuations (with all necessary precautions being taken) it doesn't mean you want us visiting your homes just yet. With that said, often the three main drivers of the housing market are quite sobering ones; debt, death and divorce and unfortunately, we're likely to see all three of those increase over the coming month which may lead to more properties coming to the market.
Whilst it's technically too soon to declare the UK in recession (this requires a decline in GDP for two successive quarters), Rishi Sunak has confirmed 'it is very likely the UK will face a significant recession this year'. It took just a few days of impact from the virus in March for the economy to shrink by 2% across the entire first quarter. The UK will be in some form of lockdown for the whole second quarter which explains why the Bank of England Monetary Policy Report for May 2020 indicated a potential 30% drop in output for the first half of 2020 – If correct this would be the fastest and deepest recession for three centuries.
However, this could be a very different recession to those we've seen before because it's been caused by a very different reason. The most recent recession in 2008 was triggered by the global credit crunch. Banks were not willing to lend money, so the housing market ceased up and prices fell. At the moment banks are lending money and offering mortgages (65% of buyers in Worthing purchase with a mortgage), so this shouldn't stop you from buying your next home. Whilst this may be an incredibly sharp drop into recession, it's hoped we may also be able to bounce back very quickly.
No bold predictions from me this month, just the usual message that if you need any help or advice regarding moving home, just give us a call or send me an email.