House price meltdown, that’s what we’re in for. All the experts say so.
Except they don’t.
This list of house-price forecasts can be touted as such if you like, but it’s not what it is. Of course, there’s a swell of people that spend a lot of time talking the property market down and wishing that it would crash, indeed there are whole websites dedicated to it such as HousePriceCrash.com. Cheery stuff.
We published a poll on Twitter this week that even resulted in 33% of respondents stating their belief that house prices would fall in the next 12 months with just 14% forecasting an increase. Perhaps fuelled by Armageddonists.
Actually, what the image above shows is the range of stress tests that various organisations plan for. They are not Bank of England predictions or forecasts; nor HSBC’s opinion on what will happen to the UK property market and neither should such numbers be sold as such. They are worst case scenarios. What could happen. In the same way that we think about what could happen if a 1 mile wide asteroid from space were to hit Disney Land.
There’s a self-interest in creating negative sentiment over house prices either just ‘to be right’ or because you represent first time buyers that obviously favour lower house prices. Long term renters may even harbour a pang of jealousy for their fellow human that owns and has built unearned, tax free equity in a house. Vested interests.
And, of course, there are those of us that have a perceived vested interest in talking the market up, perhaps. Estate agents, politicians, mortgage brokers, home owners themselves.
But shall we just stick to facts, rather than hyperbole? A data led approach is surely more credible.
Reasons to be cheerful:
- The Nationwide HPI yesterday states that house prices rose by 3.7% in the last 12 months and by 0.7% since last month.
- MyHomeMove, the UK’s largest property lawyer, has consistently recorded over the past five weeks that the majority of estate agents are experiencing fall-through rates of their existing pipeline of sales of less than 10%. ‘Normal’ is usually around 30%
- Yomdel, the digital communications provider to the property industry, reports a week on week rise of 16% (avg) in buyer, seller, landlord and tenant enquiries to their clients.
- Unemployment is expected to rise but mitigated greatly by the Government’s furlough scheme that is designed to retain employees within their firms. The ONS’s own statistics released in the last few days show that whilst the expectation was that 172,000 unemployment claimants would be added in March, it turned out to be an addition of just 12,000.
- Today, Rightmove, the property portal, has announced the outcome of a survey of 800 buyers and sellers which confirms that 94% still intend to move home as intended before the pandemic. Estate agents’ stock levels are down just 3% on ‘normal’. Online searches for properties are up 20% on levels seen at the beginning of lockdown.
- Agents will this week be issued with guidance on how to get back to work whilst adhering to social distancing guidelines and this will include home visits for valuations and for viewings. May will be the month that the property market restarts.
- No one has a crystal ball, least not the doom-mongers. But with the foregoing considered and with interest rates at ridiculously low levels, the fundamentals remain strong for a swift bounce-back. There is no evidence nor criteria in fact, that robustly points to an outcome that necessitates a house-price crash. Even in 2008, a protracted crisis where money was simply withheld by lenders, unemployment rose and uncertainty prevailed for many months, prices dropped by 12% from peak to trough but, as ever, recovered.
What does all of this mean?
If you were planning on buying, you should still do so. Waiting for a big price drop as people did in, say, 2016 when Brexit paralysed the country for three years, only resulted in prices INCREASING by 13% between then and now.
Don’t make that same mistake. UK property values trend upwards no matter what. They just do.
Feel free to comment below, whether you agree with me or not.