The current post-pandemic climate is a petri dish for doubt. Uncertainty is driving the UK housing market to extremes, which is affecting every element, from first time purchasers to seasoned landlords.
THE POLITICAL BACKDROP
Our third Prime Minister in six years is about to be voted in after the last two were unceremoniously deposed. Larry, number 10’s cat, doesn’t even bother to introduce himself to any new tenant, or the 20 odd housing ministers that have crossed his threshold since 1997, as he has come to expect their imminent eviction. Given this, is it any wonder the housing market is in the state it is today? There is no consistency which feeds further into housing uncertainty.
PAST AND CURRENT INFLUENCES ON THE UK PROPERTY MARKET
Since 2016 when the referendum on Brexit was first announced, the UK has been in a state of flux. The lead up and aftermath of the vote provided no security and even before the ink had time to dry, the pandemic hit.
Post-pandemic the UK is emerging from one crisis straight into another. As the war in Ukraine rages, inflation continues to skyrocket, causing a cost-of-living crisis that’ll make the history books. Despite all this, UK property prices continued to soar (until June’s slight slowdown) after an unnecessary stamp duty holiday added fuel to a hot market that was already ready to let rip post-Brexit. Post-pandemic, the need for greener pastures has been accommodated by the ability to work from home. This provided all the incentive buyers needed to escalate their 5-to-10-year plans that up until the end of 2021, low interest rates helped facilitate. Now that inflation has forced the BOE’s hand to increase interest rates, buyers and sellers are keen to either utilise their locked-in rate that they have for the next six months or cash in.
UK PROPERTY BUYERS
Buyers’ uncertainty lies with when interest rates will come back down again, and so despite the impending recession looming that could bring house prices down, they are keen to implement a move. In some cases, no matter the cost. Overbidding within the market has been as proliferated as the pandemic, but that is starting to wane as the cost-of-living hits home and inflation diminishes any pay rise received. The additional reality that any drop in house prices won’t be felt if your mortgage costs you more, means buyers remain keen to compete albeit with more conservative funds than before.
UK PROPERTY SELLERS
Property owners considering selling are questioning if property prices have peaked. For many, if the next two years are as grim as expected, it now makes sense to bring forward any move that was planned within that time, for fear of not achieving the same amount as they currently could. For first time buyers, schemes like the mortgage guarantee scheme and Help to Buy coming to an end are causing further uncertainty in regards to what, if anything, will replace them, meaning buyers remain motivated to complete.