What is a safe bet in today’s economy? I’m not sure such a thing has existed this year.
The world has been turned upside down by Brexit, the pandemic and, in the UK specifically, more Cabinet reshuffling than illusionist David Blaine does in Ikea.
Finding a dead cert right now is like having a punt on one of these new-fangled cryptocurrencies. I mean, what even is a Bitcoin?
Well, regardless of all the drama and uncertainty, one thing has remained strong and steady: property. Our homes have stayed the course while everything around them wobbles or worse. And this solidity goes back quite some time.
We all need to be prepared but also level-headed
In August 2012, as the London Olympics stirred some rare pride and national unity, the average UK property cost just over £170,000. Ten years on from that brilliant summer, the same home cost around £295,0001. Not a bad return on a decade-long investment — a 70%-plus increase.
If, like millions of people, you were lucky enough to own property in London in 2012, this past decade has been even kinder. Ten years ago, the average property price in the capital was already beyond today’s national mean, at around £310,000 in August that year. Today that same property would be worth north of £545,000. The Big Smoke certainly is a different world.
Sense of perspective
But why the history lesson? Well, I think context is important. With all the doom-mongers working overtime at the minute, a sense of perspective is critical.
Following the pandemic and given the UK’s insistence on compounding the issues with political chaos, the property market suddenly looks on unsteady ground. This once dead cert, this banker-better-than-the-bank, could be heading south.
A 30% collapse in the market is certainly a prediction that will sell papers, but how much fact and precedent underpin it?
Flip open any national newspaper and commentators and experts are bending over backwards to warn of a coming crash. ‘Carnage,’ forewarned one person in The Guardian, with other publications predicting a 30% downturn.
Are they correct? Right now, who knows? As I write, the market remains relatively steady with any dip tracking pre-pandemic end-of-year lulls. But that’s not to say a downturn isn’t coming; in fact, I think 2023 will certainly be difficult.
However, again this comes back to perspective. Most homeowners have experienced some serious and consistent growth over the past 10 years or so — 10%-plus in the past year alone.
This is the ride we have chosen, and I for one am not getting off yet
Also, the wide range of predictions and prophecies from these so-called property soothsayers helps nobody. An eye-catching 30% collapse in the market is certainly a prediction that will sell papers, but how much fact and precedent underpin it? Who knows? Nobody knows what the market will do and I will not be surprised by anything. But this ‘Pin the tail on the market crash’ stuff has to end.
Ultimately, we are all in for a bumpy ride over the next few years. The long tail of the Covid pandemic was always going to hit our wallets and now the chickens are coming home to roost.
Of course, the strategies in Westminster could have done more to ease market fears, but what’s done is done. For the future, we all need to be prepared but also level-headed. Yes, property prices may take a hit, but let’s remember the road they took to get here and the way they have rebounded before.
This ‘Pin the tail on the market crash’ stuff has to end
For industries like the mortgage sector and later-life planning, there will be obvious worries. With interest rates climbing, the last thing we need is the bottom falling out of the market.
But, again, calmness and perspective are needed. Rates go up, and they come back down. This is the ride we have chosen, and I for one am not getting off yet.
Andrea Rozario is chief corporate officer at Bower
This article featured in the December 2022/January 2023 edition of MS.
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