It’s been a crazy few years so far, and we’ve been through a period that has been nothing short of life changing.
Everything now can quite easily be categorised as pre-Covid and post-Covid. The economy, sport, work, housing, government, more or less anything you care to think of.
Economically, of course, things have been far from easy over this period. However briefly, we experienced one of the sharpest and most pronounced recessions in modern history, with entire industries and sectors shut for months on end.
These sectors are now approaching pre-pandemic levels of activity; however, it’s going to take time to recover, and this is also coupled with labour shortages caused by Brexit. This isn’t necessarily all bad news, and there’s plenty of good news to be pleased about, but let’s talk about what we can expect from the economy for the rest of the year and how that looks set to impact UK property.
The return of lockdown?
A very touchy subject indeed, speculation has been growing for weeks that a spike in Covid cases over the Autumn and winter months could see a reintroduction of lockdown restrictions in order to protect the NHS and prevent hospitals from becoming overwhelmed.
It has to be said that the main consensus coming from the government’s scientific advisors appears to be that they do not expect things to get as bad as they were in January of this year, thanks mainly to the vaccination programme’s success.
The government laid out its plan A and plan B in a press conference recently, with plan A reflecting a relatively good winter, and plan B reflecting a challenging situation with rising cases. As it stands, we’re not quite sure which to expect, however, there’s a distinct possibility we could see a return of some measures to mitigate the spread of Covid.
What we would say, however, is that they’re highly unlikely to be anything like the severe restrictions we saw at the end of last year and the beginning of 2021.
The property market
On to the property market then. Whilst new restrictions could be harmful to other industries such as hospitality and tourism, there’s very little evidence or expectation that the same would apply to the property market.
Given that UK property has been through these restrictions before, we can extrapolate from that. With UK property actually growing during the previous restrictions we can say with a modicum of confidence that the market is well insulated from any further lockdowns.
For investors, it poses an interesting question – whether to expand a portfolio or wait and see.
Caution is understandable, however, we can see from previous lockdowns that a slowdown in economic activity only temporarily pauses prices and demand before exploding again.
With that in mind, if you’ve been planning to invest or grow your portfolio you shouldn’t allow the possibility of more restrictions later in the year to pause your plans or you may regret it.