So how long will this slump or dip in the property market last? How long will there be a sale on in the property market?

This is the question and my expectation is set out by the following assumptions:

  • The lockdown comes to an end by mid to late May (i.e. another month from writing)
  • Valuations of residential property downgrade by 10-15% creating a buying market for investors
  • Stamp duty for first time buyers is reduced to zero; and the second property surcharge is scrapped
  • Base rates turn negative before Q3 (September)

With the above; I think the second quarter results will show a unprecedented reduction in GDP, the threat of recession alone will prompt discussion on a reduction to negative rates – the monetary committee will hold off to see if the economy recovers on its own before caving in on the expectation that Q3 will also show a reduction in GDP – thus satisfying the criteria of a recession.

This will – in the autumn budget (which we have this year due to the postponement of last years budget) – increase the need for a relaxation in some of the measures which were brought in to curb the demand on property. This may be the opportunity for the government to remove the mortgage interest rate relief change and relax stamp duty measures.

The fiscal policy (reducing tax) and the monetary policy (reducing rates) should boost the property market and with QE (quantitative easing – basically printing free money) likely to continue, liquidity should return to the market with investors looking for assets.

With Christmas on the horizon, fewer people look to move house – and the lull in the market may persist if this is left alone by the government – hence why I think they will take action during this time and try to ignite some growth.

The property sale should continue through to the beginning of next year – despite the increase in values they will still be lower than 2020 Q1. This is likely through to the middle of 2021 Q1 (February) where transaction volumes are generally lower. Seasonality of transactions suggest that the market usually picks up in March.

I would then suggest that if negative interest rates persist throughout 2021, this would be a year where property values increase at an unprecedented rate in the residential market – driven by investors. Planning laws may be altered to help the commercial property sector.

All of the above suggests that property ownership for future generations may be out of the question. Private renting will be the only way with the investor tasked with creating housing of a suitable standard – in line with the local authority’s requirements – whatever they may be.