Is the UK property market going to crash?

Short answer: No.

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Despite the almost deafening noise from the mainstream media that seems to be attempting to induce fear in home movers, the UK’s property market, is in a much more robust condition than it has been during previous recessions.

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There’s been considerable commentary around the Bank of England’s Base Rate and rising interest rates on mortgages having a negative impact on borrowing and that this will trigger a market crash, but this must all be considered in context of where the UK property market is, and the state of the mortgage market today.

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In June 2014, the Bank of England’s Financial Policy Committee introduced more thorough affordability checks and stress tests for those seeking mortgages, alongside banks facing limits on the supply of very high loan-to-income mortgages. This set in place ‘macroprudential’ policies to mitigate mortgage lending risks that played a role in previous property market crashes.

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The latest data from real estate giant Jones Lang LaSalle tells us that at present over 85% of mortgage balances are on fixed interest rates, meaning the majority of homes have significant protection from higher borrowing costs. Furthermore, roughly one-third of households across the country are unaffected by interest rate rises as they own their homes outright.

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Factors that also played a role in the previous property market crash such as unemployment levels are also in a very different condition to that of 2007. Whilst the labour market is likely to soften, it is starting from a far more robust position with unemployment currently at near 50-year lows.

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These factors, together with the underlying lack of property available to buy, should provide support for property prices. Whilst there will likely be a slow down in growth and perhaps a correction in certain locations that were over inflated, we’re not expecting a drastic drop.

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So – will there be a property market crash? No.

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Are we chartering choppy waters where your best bet is to take advice from experienced industry professionals? Yes.

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There is opportunity to be found in today’s market for the savvy investor.?

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(If you know where to look)

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And for the more risk-averse investors who want surety, there are developers and management agencies offering rental assurances that will ensure an income.

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As always, get in touch to talk to me or any of the team about investing in property.?