Whether you are a homeowner looking to sell or a prospective buyer trying to find a house or flat to purchase, you might have read confusing and seemingly contradictory information about the state of the housing market during the coronavirus pandemic. Keep reading to learn more about how home sales might be affected by a recession caused by the current crisis.
What the looming recession means for house prices
The COVID-19 pandemic has caused massive economic upheaval in the UK and around the world, leading millions of people to lose their jobs. Entire industries are facing some of their worst years on record, for example the tourism and airline sectors that have seen their profits plummet and put some companies on the verge of bankruptcy.
These negative financial outcomes in turn mean less money in the economy as a whole, and without any quick fix in sight this can lead to a recession, which is another word for a major economic downturn. A recession will have impacts felt across every part of the economy, including for the housing market where it might dramatically affect house prices.
But researching the impacts of the coming recession on home sale prices can be confusing. Some news articles suggest that prices might stall completely in the coming year and see only minimal increases at best. Other articles predict a rosier outlook where demand for homes spikes next year, which in turn might help to drive prices upward because greater demand can have that overall effect.
How the coming recession might affect home buyers
Many housing market professionals are closely tracking the coronavirus’ impact on house prices, and they are able to cut through the competing messages on what the ensuring recession means.
There’s some suggestion that the coming recession that is expected as a result of the pandemic might not affect the housing market too much, and that the current increase in demand that is visible across many parts of England and Wales will persist through next year. If that’s the case then buyers can plan accordingly and know that they are unable to see a major drop in prices in at least the next few months, so if there’s a home they want now they should make an offer.
But the uncertainty also means that there’s still a chance house and flat sale prices might drop next year, and some buyers will hold off making offers on homes now, instead holding out with the hope that they are able to get the same property for cheaper once the recession hits.
Government financial support programs have helped some people in the UK weather the storm of the pandemic, and may have helped to prevent any massive collapse in the housing market. But these schemes are only temporary. If you’re a buyer you might take your chances with waiting until the programs have expired to see if the economy takes a downturn, which in turn could lead to reduced house prices and make it easier for you to afford a home.
Outcomes to be aware of from a recession if you’re a homeowner looking to sell
There are some observers who believe that the recession caused by coronavirus could actually be beneficial to homeowners looking to sell. They say that government intervention designed to stimulate the economy could help to keep the housing market at least stable if not grow it.
Indeed, some observers believe that house and flat sale prices should remain stable in the near to mid-term and that it’s only in the long-term that we might start to see the average home sale price start to dip as a result of the recession. If those predictions are true, for homeowners that means putting your property up for sale and trying to find a buyer sooner rather than later is key.
If a major recession hits then property prices are more likely to drop significantly as a result, which in turn can make it even harder for sellers to find buyers at the price they want or need. That might justify looking at faster options for selling your home compared to doing so through an estate agent, which can take many months or even longer. Alternatives include looking to sell your house fast in London, or elsewhere throughout the UK to a fast home buying company like LDN Properties.
Just remember that the status of the housing market can quickly change
The housing market can be relatively unpredictable. After all, in 2019 there was no idea that a pandemic was on the horizon and about to upend practically every aspect of our lives, from employment to personal relationships and beyond. That’s why it’s important to remember that the future is uncertain, and to only use the information above as a general guide.
Buying or selling a house or flat is a major financial and personal decision and not one that should be taken lightly. Use the details in this post to help guide you in making the choice of whether to sell or buy, yet always understand that the situation might change in an instant. This will help you to be prepared if future sudden changes in the housing market occur.