Category: Market Commentary

– The Housing Market Has Restarted But The Economy Is Stalled

– The Recession And A Credit Crunch Will Limit The Recovery

The housing market reopening for business last week was welcome news but caught many unaware, including the government. Restarting the housing market was always going to be a priority given its importance to the economy, so it is not surprising that restrictions have been eased as early as possible. Initial data suggests that interest from consumers has rebounded, though perhaps not as much as estate agents’ excitement. The market will almost certainly recover from the low levels of transactions reported in yesterday’s HMRC release but it will take time for delayed and new purchases to reach completion. Meanwhile, the economic data continues to worsen and the largest economic shock in recent history will limit potential buyers’ ability and enthusiasm for making the biggest financial decision of their life. The housing market may have restarted but the economy is stalled and there is a credit crunch limiting lending at higher loan-to-value ratios.

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The past will be revised. The present is confused by COVID-19. And the unprecedented effects of the lockdown cast enormous uncertainty over the future of the housing market. None of this has curbed the enthusiasm estate agents have for publishing house price forecasts.

True, there’s a huge need for guidance in these troubled times. But putting definitive numbers on where the housing market is heading seems, at the moment, pointless. So, in our first UK housing market commentary we will start by admitting that there’s little that can be said with certainty. Therefore, this note will focus on what we know, what we’d like to know, and the risks we see in coming weeks, months, and even years.

Most market commentary involves speculation and projection based on recent trends, if only because lags in the data demand it. In times of sudden change, like now, the past trajectory is often of little consequence. So the post-election “Boris Bounce”, if it existed, is now irrelevant. But recent data does reveal clues to deeper underlying trends that may help us as we strive to understand life in a post-lockdown housing market.

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