Tue 05 May 2020
Mark Bridge (MNAEA), Director & Owner
Whilst there is a lot of good information out there, there are also people pushing inaccurate or false information. Sometimes innocently but not always!
As most of us aren’t medical professionals or economists, the question is which headlines to trust?
With that in mind I had the great opportunity to take full advantage of a webinar with Roger Martin-Fagg, a 'behavioural economist' whose global experience ranges from the Bank of England and New Zealand Treasury, to consultation across a whole raft of industries.
Here are the key points addressed...
When is the Lockdown likely to end?
What is happening to the money supply and why is this important?
Will there be another financial crisis?
What about the Stock Markets?
Are we heading for a global recession?
What will happen to interest rates?
What about inflation?
What is the prediction for consumer confidence and spending?
So, what is the likely impact on house prices?
The short answer is that house prices are unlikely to be affected.
House prices were doing very well at the start of the year. It’s important to remember that what’s happening right now isn’t due to lack of lending or lack of spending. We are simply on a temporary break of doing non-essential activities.
For house prices to fall, lockdown would need to last for multiple years. If that were to happen (and it’s incredibly unlikely it would), this long-term lockdown would simulate a reduced spending power and reduced lending.
Any regional house price fluctuations that may be occurring are far more likely due to conditions outside of the Covid-19 lockdown, for instance Brexit.
And what can we expect over the next 12 months?
The next 12 months are going to be split into tranches. Each tranche will see a section of life return to normal.
This can start happening soon as we know the NHS is no longer at risk of being overwhelmed.
The obvious ones will be high street shops and stores opening along with services such as going to the dentist or seeing your hairdresser.
Many of you will be reading this from home as your regular place of work is currently off limits. As people return to work transport of all kinds will also start to increase again.
Exactly when these tranches will happen, and what is in each one, is down to educated guess work. We will likely see a second, albeit much smaller, peak in infection rates as we roll lockdown back so the relaxing of guidance will need to be tweaked accordingly.
What's the important takeaway for the next 12 months?
The important takeaway is that over the next 12 months, specifically for the first quarter, we are likely to see the dip in the economy continue. As measures ease, the economy will improve with a rise most likely in July.
The lockdown is like a giant foot stood on the hosepipe that is regular economic spending. With each easing of the lockdown measures, that foot will lift off a little more. Spending will surge as it’s built up behind the blockage and people look to catch up not only with their family and friends, but their lives and plans.
Post first quarter of the next 12 months will likely see a continuation of social distancing and businesses having to innovate to accommodate that. Take for instance house viewings. It may seem as if you have to turn up to look around a house however savvy estate agents are already turning to virtual viewings as a solution to the lockdown. These techniques are likely to become the new normal.
Overall the future of the economy is far more positive than many are giving it credit for. In fact in 12-18 months time I’d expect many estate agents to have concerns around recruitment as they try to keep up with the demand.
Have you found the above interesting and informative? Hopefully for those worrying about house prices, this has gone someway to addressing any concerns you have.
|Stay safe, keep well.
Director and Owner
Mark Antony Estates
p.s. Are you curious what your property could be worth? Find out in around 53 seconds by clicking here.
p.p.s. Download our eBook on how to get the best selling price for your property by clicking here.