Aaaagggghhhh! Just as we have turned a corner in the property market, likely to get back to 2018 transaction levels and see a nice steady 2-4% increase in property prices this year, bang! The bad news of Coronavirus has caused absolute mayhem in stocks and shares which have plummeted at levels last seen during the panic of the credit crunch in 2007.
To fight the potential of economic doom and gloom, the Fed in the US has already cut interest rates and we had our surprise cut to 0.25% which is expected to filter through from 1st April. .
My view is the main problem will be at the trading down and retirement end of the market due to being more vulnerable than those that are younger and also less likely to have underlying health conditions. This group also tends to be more sensitive to weather changes and newspaper fears than those buying for the first time or trading up. In addition, it could impact on the recovery in the international markets if their travel is curtailed.
However, when you look at the strength of the market over the last 18 months, despite Brexit fears, I do feel that those buying in the UK are much more resilient to scary newspaper headlines than they have been in the past.
People are much more savvy. They know prices rise, fall and stay the same, but believe over the long term they tend to rise - albeit this is being challenged in some areas of the country. They are better at getting advice from mortgage brokers from the start and rates of course are still low. There is more help available with government guides on how to buy, sell, let and deal with leasehold, and to be fair to the papers, they have been less likely to predict property prices falling than they have in the past, even with the recent doom and gloom.
With the beginnings of the first ‘good news’ coming out of China that they may have slowed the rise in cases, this suggests that it may be something that can affect a country for around two months and then potentially can be contained – providing of course we have seen the worst this virus can do.
The issue will be more about how much of an impact the virus will have on the economy and whether that will cause people’s jobs to be under threat, particularly within sensitive industries such as events, catering and tourism and, of course, we have already seen the sad demise of Flybe.
And, with stocks and shares tanking, it may even lead more people to put their money into property, seeing it as a ‘safer bet’.
So if this ends up being a short-term shock and the government react quickly to boost the economy and limit any damage, hopefully buyers and sellers will know that the impact of this virus is likely to be short term. Buying a home is often purchased for five or more years, so at the moment, my advice remains the same: if you find a property you like, you can afford it now and in the future, and are going to stay there for a reasonable amount of time, you might as well go for it.
However always make sure you mitigate any problems caused by a fall in house prices over the first few years.
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