Important Advice For Selling Your Home During a Recession
As the UK economy hangs over the edge of a recession, many people are now wondering if it is a good idea to sell their homes during such a time. Unfortunately, there isn't a straightforward answer to this. With a clear insight into the present economic situation, Cheltenham letting agents provide you with some astute guidance.
Since your property is essential to your finances, the property industry continues to receive significant government funding. Whether it's assistance for first home buyers, delaying mortgage instalments during the pandemic, or ongoing adjustments to stamp duty rates, the property market is crucial.
The UK economy shrank by 0.3% in April, with more than the 0.1% contraction in March, according to new data from the Bank of England. According to initial estimates, the economy grew by 0.8% in the first quarter of 2022. However, the rest of the year will not fare so well. The UK economy will increase by about 3.6% in 2022, according to the OECD, before contracting to zero growth in 2023. In contrast, the Chambers of Commerce predicts growth of 0.6% in 2023 and 1.2% in 2024. It is crucial to consider the bigger picture when deciding whether to sell your home during a recession.
Effect on the property market:
The property market in the UK has a big impact on monetary policy. According to the Land Registry, the average cost of a property in the UK is presently an astonishing $281,000. This is a £31,000 gain over the previous 12 months. The impact of the economic slump on real estate values will take time to materialize, similar to other economic factors. As a result, it can take some time before the full effect on the UK real estate market is realized.
Demand in the property market:
The UK property market sprang to life with an increase in the number of buyers hunting for houses when lockdown restrictions were lifted. These individuals tend to be searching for homes farther from town and city centres, and they desire a sizable garden as well as room for a prospective home office.
Second, for generations of Brits, housing has been a constant and reliable investment possibility notwithstanding the changes and fluctuations of the UK economy. Many consumers continue to chase increased housing prices, propelled by relatively inexpensive mortgage financing. Numerous analysts predict that in the near to medium term, demand will decline significantly more quickly. A decrease in the percentage of buyers and a spike in the sellers is not the ideal circumstance.
Can you still sell a property during a recession?
Undoubtedly, selling a home during a recession is possible, but there are a few things to consider. Due to the lack of buyers and sellers reluctance to take on the risk, you might not obtain the price you were looking for. It's also important to recognize that mortgage access is more affordable during recessions since interest rates are often low. Finding a buyer, however, might be challenging if you wish to sell your house quickly, although first-time buyers and investors will still be looking. Selling relies heavily on your circumstances, including where you reside and whether you can make your mortgage payments. It all comes down to whether you get your asking price and locate a buyer.
Additionally, the UK's real estate market always includes a group of eager buyers and eager sellers, regardless of the state of the economy. You must be realistic when setting the price of your property and be ready to compromise, though, because a recession will affect home prices. When you have to sell your home and move, it's always worthwhile to work with a reputable estate agent and mortgage broker. However, you have to be ready to bargain a lesser selling price and bargain a lower purchase price for the home you're moving into.
Do not forget that purchasing real estate should not be considered a short-term endeavour; instead, you should be prepared to wait patiently for what may turn out to be a protracted recovery and to profit from your new house (eventually). In the past, UK home prices have been among the best-performing financial assets over the long run.
The UK real estate market has drawn significant long-term support and good yearly returns. But record low base rates in recent years have fueled inexpensive debt that many people may find difficult to repay owing to a lengthy crisis in the cost of living. As a result, there will probably be a temporary decline in demand for UK real estate, a rise in the number of homes for sale, and a decline in mortgage applications. In actuality, although over a longer period, UK housing values have done exceptionally well.