The 31st of January has come and gone and the UK is now officially leaving the European Union (EU), and the financial stability that the market was craving now seems to be in place. But now that the dust has settled, is the longer-term prognosis looking less than healthy? UK-specific issues aside, we are a player in the global economy and it cannot be denied that there are plenty of market-affecting issues that can unbalance and upset the sensitive national and global property trade. Issues such as Coronavirus, Australian wildfires, and Middle-East upsets can sufficiently unsettle the world economy, and it doesn’t take much more than a few problems to push the markets into a decline.
Certainly, some commentators are choosing to err on the side of caution and point to the start of what could become a global slowdown in many sectors, but are things really as bad as they seem? There are some indicators such as reduced bank capital, soaring private debt, and ballooning Government deficit are already in place, but that doesn’t necessarily mean that it’s all doom and gloom.
The crash of 2008 taught the banking world many hard lessons and, fearful of another beasting like that, many of those lessons have been taken onboard. Banks will no longer lend to the sub-prime sector, and 100% mortgages are a thing of the past. Banks have become more responsible with their lending, and try to steer clear of the risky financial practices that helped bring them down before.
The Bank of England has stated that the underlying UK demand growth continues to remain below potential in the short term, but are expected to pick up during 2020 as the dampening effects from Brexit-related uncertainties disappear. GDP growth will also be supported by easier fiscal policy and the gradual recovery in global growth. In the Bank’s central forecast, UK GDP growth picks up from 1.0% in 2019, to 1.6% in 2020, around 1.8% in 2021 and as high as 2.1% in 2022. This are encouraging figures and help keep the property market buoyant.
House prices in England are now at a record high, and that shows no sign of slowing up, and rather than flounder, the projections from the Bank of England suggest that property will remain a strong investment.
Yet the market is struggling, and not because properties aren’t being sold as expected, but because there isn’t sufficient low-cost housing around. By the Government’s own admission, there is an urgent need for another million homes, with many being sited in the cheaper end of the market.
All of these factors combine to put the UK economy in a fairly strong position and one that is likely to get stronger. Talk of economic downturns are, for the most part, simply unrealistic. Even ignoring the positive data from financial institutions, the Government is committed to building on a scale not seen before, and that can only be good for potential homeowners and the economy in general.
Perhaps the scaremongering tactics are out in force again and slow and steady growth is set to stay. If you’re in the market for a new property, speak to one of the advisors at Grange Mortgages about securing a mortgage and protection policies.