It was officially announced last week that the UK is in recession for the first time since 2009, and although this has come as no surprise to anyone, it’s still not good news.
The Office for National Statistics said that gross domestic product fell in the second quarter of 2020 by 20.4%, which is the biggest quarterly decline since records began in 1955.
As mentioned, this is no huge surprise due to the nationwide lockdown caused by the coronavirus pandemic, which meant almost every industry ceased trading for a period of time, including the property market.
However, the property industry has certainly been more fortunate than others. After being one of the first industries to open up back in May, it has remained resilient and we’ve continued to see positive growth and movement from the pent-up demand during the period where no viewings were allowed.
The stamp duty holiday, announced in July, has also helped entice those considering moving into the market and has encouraged investors to get back into the market as well.
According to recent figures from the Bank of England, the stamp duty holiday has actually increased average property prices by £30,000.
At Andrews, we’ve also found that instructions and viewings increased sustainably in July. Viewings were up 29% compared to June 2020, and even though a third of these viewings were carried out virtually, physical viewings were also up 45%.
Instructions also significantly increased last month across our network, as lockdown restrictions were eased, compared to the number in April, the month after the government announced the start of lockdown.
Valuations were also up a third (33%) in July as people look to make a move towards the end of the year.
So while it’s certainly good news at the moment, what does the future hold now we’re officially in a recession?
Looking back to the last recession, house prices plummeted significantly between 2008 and 2009 and arguably took years to recover. Meanwhile, according to Nationwide, house prices fell 1.7% from April to May, I don’t see this as the start of a dramatic crash.
The main concern I have about the property market is confidence. If the recession starts to affect people in other areas, which naturally it is likely to, and we start to see increased unemployment rates, then this could easily filter down though to the property market and see sales dry up.
Although it’s not good news that we’re officially in a recession, like everything else this year, the long-term effects are still unknown. This recession could easily not affect the economy like previous ones, however only time will tell.
*Ellie Donaghy is Head of Lettings at Andrews Property Group