Prices in Recent Times
In this second part, we are looking prices in recent times
Looking back to the early years of Queen Elizabeth II's life may be interesting, but the real questions relate to today. We have seen that between England’s World Cup victory and 2016, prices rose rapidly with a significant wobbly in 2007. This trend continues when we examine the time since the credit crunch to the present day.
The graph is taken from Property Data and uses official house price data provided by the Land Registry, an official UK Government department. Here we see that, following the 2007 financial crisis, prices took 8 years to recover. This is a warning that property really is a long-term investment rather than a get-rich-quick plan.
Once recovered, property prices went on to once again soar. This is a trend that has recovered through the coronavirus pandemic despite predictions of doom from some leading estate agents and many sections of the media. It is true that the number of transactions - or house sales - has fallen dramatically, but this is to be expected given the recent lockdowns and social distancing measures throughout the UK. Even so, the UK Government was keen to get the housing market moving quickly as this is a major driver of economic recovery.
Property in COVID times…
COVID has presented the biggest peace-time disruption to the economy in living memory. The last pandemic of this scale was the 1918 – 1920 Spanish Flu. However, this happened on the back of World War I, making it difficult to separate the economic effects of the two events.
Despite the reduced number of property transactions, UK Property Prices still rose 7.6% in the year to November 2020.
The UK Government has provided economic stimulus to the housing market, such as the Stamp Duty threshold increase and ‘Project Speed’. Along with historically low interest rates and very favourable exchange rates between the pound and foreign currencies, there has never been a better outlook for UK Property.
In June 2020 the UK Government announced:
"This government is committed not just to defeating coronavirus but to using this crisis to tackle this country’s great unresolved challenges of the last three decades.
To build the homes, to fix the NHS, to tackle the skills crisis, to mend the gap in opportunity and productivity and connectivity between the regions of the UK, to unite and level up.
We will invest in and accelerate infrastructure across the UK; promote a clean, green recovery; reform our planning system."
Project Speed will make it easier for property developers to create new homes, especially by bringing vacant and unused buildings back into use. Through a quicker planning process, it will allow surplus commercial buildings to be converted to residential use. As the workforce continues to work from home to some extent, less commercial space will be required.
Project Speed is not only about housing. With massive spending on infrastructure will comes employment and training. Better jobs and higher skills in the workforce lead to mobility in the housing market as people move around for work and also buy more expensive properties.
Of course, it would be foolish to rely on any politician delivering on everything they promise. However, the big promises of Project Speed set a clear a direction for the economy; one that bodes well for property investment for the next decade.
"The taskforce will aim to cut down the time it takes to develop, design and deliver vital infrastructure projects. For example, it will look at how it can address outdated practices and identify blocks to progress.
Projects will include the 40 new hospitals the government has committed to build and the school rebuilding programme."
Whichever way one looks at it, that is a lot of design, construction, and ultimately jobs that will fuel the economy and lead to increased property prices in areas around these projects.