Are We In For A Major Property Crash?
There has been a lot of talk about an impending and significant UK property price crash…
…which, given the peculiarities of the UK housing market, may or may not occur. With rising interest rates, the Ukraine war, and a spiraling cost of living crisis, it’s easy to believe that the last few years of double-digit annual growth will begin to fade.
But, if the market does experience a correction in the coming months, how long should we expect the market to fully recover? The last time something like this happened was after the Global Financial Crisis. The causes of that crash and the international credit crunch were not the same as they are now. And the length of time required to address some of the major issues we face today is unknown.
But, as a guide, what happened the last time we experienced a recession, in 2008? The UK property market actually peaked in September 2007, less than a year before the official start of the recession. It took until August 2014 for house prices to return to pre-recession levels.
Investors with a sound investment strategy can anticipate healthy returns in all market conditions. Monthly cash flow can be expected almost immediately, and most investors would need a 5-year mortgage fix to lock in their positive returns. If there was a sound investment case from the start, it will also quite possibly be a sound one in the next few years.
Historically, home prices are notoriously difficult to predict in the short term. It’s fair to say that most investors (and home buyers) are reluctant to make any investment decisions until the market becomes clearer and the interest rates stabilise over the next few fiscal years. But that takes tact of a gamble, which is hard to accomplish.
