Property market aftermath warning
Property prices in the UK have soared to reach record breaking highs with the average house price standing at £261,743 and the annual house price growth rate hitting a seven year high of 9.5%, according to the latest Halifax House Price Index figures.
As the property market continues to boom, economists and property experts consider the long-term implications of the measures implemented by the government to help stimulate the UK housing market.
‘Indubitably, the extended stamp duty holiday and the mortgage guarantee scheme have greatly contributed to the creation of this emergent house price bubble’, says Simon Das, founder of specialist property finance brokerage 978 Finance, ‘it will be most interesting to see how the UK property market responds in the aftermath of such measures ultimately being rescinded’.
Martin Lewis, a long-standing critic and opponent of the government’s measures has argued that the measures have prioritised a short-term benefit to the housing market over the future longer-term needs of the nation’s homeowners.
Similarly, other industry real estate experts have voiced their concerns that the government measures have artificially propped up the housing market which will inevitably contribute to an eventual market crash.
Matthew Cooper, managing director of Yes Homebuyers has reportedly stated, ‘the government’s insistence on artificially fuelling house prices, not only with a stamp duty holiday extension but now in the form of 95% mortgages and a rehash of the Help to Buy scheme, is irresponsible, to say the least. Enjoy the boom while it lasts because if history has taught us anything, a bust is likely to follow’.
Equally supporting the proposition that the UK housing market is facing a near future crash is visionary economist and author Fred Harrison. Harrison successfully predicted the housing market crashes of 2008 and 1990, and again predicts that UK house prices will crash in 2026, followed by an even worse economic depression than the financial crisis of 2008. Harrison’s woeful prediction is based on his own economic model and does not factor in the government’s stimulus measures, nevertheless, Harrison’s warning of a UK property crash being only five years away should perhaps serve as a warning against market complacency for homeowners and industry professional alike.
Contrasting Harrisons predictions of impending doom are those industry experts who view the current property boom as a necessary boost to the nation’s economic recovery.
Russell Galley, managing director of Halifax has stated, ‘As lockdown restrictions continue to ease and confidence in a rapid economic recovery continues, house prices will likely continue to be supported for some time to come, particularly given the shortage of properties for sale’.
In agreement, Simon Das, managing director of 978 Finance added, ‘we must remain vigilant of course, yet current indications suggest the UK property market remains strong, versatile and able to offer excellent property opportunities at affordable levels of investment’.
