What Does the Recession Mean For Investors in the Housing Market?

A fresh wave of buyers are more confident than ever and are ready to invest in properties – as we’ve seen from the mini-boom the UK property market has been experiencing very recently. With higher numbers than we’ve seen in a while, it’s important to take a step back from the excitement and consider what our next moves should be.

Housing prices have been in recession and while the last economic decline (12 years ago) resulted in a property market crash, we can’t know for sure what will happen now with such a large influx of buyers all at once making investments. All we have are the current facts to help us make the right decisions during such a busy and uncertain time.

What is a recession?

Typically, in the UK, a recession is when the GDP is struggling with reductions – and while it can be measured in a few different ways, the most common one is the nation’s total expenses all added up. This can include a variety of things, from investments in companies to household spending, and all of it makes a difference.

In normal cases the economy grows, but a recession occurs when it’s dropping. This is mostly due to the effects of the pandemic, which can be seen in a variety of fields; for example, the property market was going strong until the complications of COVID-19 put a halt to many sellers and buyers across the United Kingdom.

One of the main reasons why a recession can be an issue for property investors is because of how drastically it can affect the housing market overall. A strong economy generally equates to more of everything, including property sales, since people often need to have a good amount of money and a stable job in order to purchase a home.

The government receives more money from taxes and can use this to help the community as a whole, whether it’s in the healthcare field or even to reduce the amounts of taxes people have to pay. Recessions cause the opposite of this – forcing many companies to make cuts, a higher unemployment rate, higher taxes, or a smaller budget to make improvements.

What does this mean for the current situation?

While we have seen a decline in prices in houses over the months during lockdown, things are starting to pick up now that restrictions have been eased and a flood of people are investing. The recent recession has been quite different to the ones before, since it was caused by the pandemic and measures that were put into place to help keep people safe. The country is starting to get back to normality, although it’s still uncertain of what will happen next.

Is now the right time to invest?

Countless people are making the most of the current stamp duty holiday and the opportunity to buy after the long wait – and whether this is the right thing to do is entirely up to you. As long as you have the facts and make an educated decision, you’ll have the chance to make successful investments.