Where next for the housing market?

It’s been a busy time for the first half of 2021 partly due to the Stamp Duty reduction which meant if you completed on a purchase before June 30th you could have saved up to £15,000 in Stamp Duty Land Tax if you bought a property up to £500,000 or more. I only had one purchase that didn’t complete in time due to the vendor dragging their heels and fortunately my client managed to negotiate a corresponding reduction in the purchase price.

Whilst there is still a discount if you complete on a purchase on or before 30 September 2021 of up to £2,500 it is clearly not so much of an incentive.

I saw many properties achieving higher than expected sale prices due to the demand for quality homes and shortage of supply.

So where next for the property market and property prices?

Many people I have spoken to have concerns they will fall. I personally don’t think they will. The main factors that affect the property market are supply/demand, the economy, and employment & interest rates. There is still a lack of instructions being listed with estate agencies and I have many clients still looking for a suitable home. Whilst the media regularly bang on about inflation (and I reckon inflation is at least 10% especially if you include the cost of housing) I do not think they will increase interest rates. The central banks can pick certain goods in their CPI ‘basket’ that don’t increase too much but we are seeing prices of food, goods and housing increase by a fair amount.

They do this so they don’t have to increase interest rates. That would put pressure on the housing market, on businesses who have been able to borrow very cheaply and the Governments’ own borrowing from money printing partly due to the lockdown giveaways. In the US for example 40% of US dollars in existence were printed in the last 12 months alone. Incredible!

I might be wrong but I think property prices will remain high until the next big financial crash which might be around the year 2025. Financial crashes generally occur every 18 years. The most recent ones being 2007/2008 and 1990 before that. By then the digital economy being created using blockchain technology software such as Bitcoin, Ethereum, stable coins, & CBDCs (Central Bank Digital Currencies) will be more stable and ready to migrate the current old highly inflationary fiat currency system to the new one.

Will property prices drop at that point?

It depends on how smooth the transition will be is my guess. Maybe after 2025 we may be able to have a mortgage using DeFi (Decentralised Finance) on the blockchain and even the transaction recorded on the blockchain as everything becomes digitised and the internet is used for sending money and value.

Maybe others will be content on buying ‘virtual’ property in the numerous ‘metaverses’ created on some of the blockchains but let’s face it you can’t live in them.