This Crazy Property Market, How Long Will It Last ?
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This Crazy Property Market, How Long Will It Last ?

Analysis, General

Everyone in property, whether professionals or house buyers alike, likes to try and predict the property market. At the moment, most of them would agree that the market has been little short of crazy. With record interest, record sales and record prices in many cases. So now might be a very good time to ask how long will this crazy property market last?

As long as demand exceeds supply?

The demand versus supply balance has been a major factor in the housing market over the last few decades. Overall there simply aren’t enough houses to accommodate all the people who want or need one.

In recent years demand has been little less than insatiable. More recently new housebuilding supply has also been considerable. How long both of them will last is very difficult to quantify.

As long as it is cheap to borrow money?

Interest rates have been low for over a decade. They have now reached their lowest ever. That means even in the face of high property prices it is still cheaper than ever to borrow the money to buy. Anyone can see that the only possible direction for mortgage interest rates is up. (But not necessarily the base rate of course.) It’s impossible to say when, although most would suggest it won’t be any time soon.

As long as it’s easy to borrow money?

Low interest rates alone don’t dictate whether people can or will borrow money. The ease of doing it, the willingness of lenders to lend and the prudence they practice in doing it are other considerations.

There are several factors to bear in mind here. These include the availability of high LTV mortgages. Many buyers and especially first time buyers rely on these.

Also something that shouldn’t be forgotten is buying incentive schemes such as Help to Buy.

As long as the Stamp Duty holiday lasts?

Most people will agree that the Stamp Duty holiday has a lot to do with the current crazy market. It’s already known that it will wind down in June and end finally in September. But the current Government are developing something of a reputation for changing their minds. So who knows if the Stamp Duty holiday could be extended further.

Medium term there could be permanent reform to Stamp Duty which could impact the market too.

As long as furlough and other financial support lasts?

In the face of the dire economic consequences of Covid the financial stimulus from the Government has kept the property market and the economy moving. Financial support was supposed to end in October 2020. Yet it still being handed out. How much longer this might last is anyone’s guess.

As long as the spring and summer lasts?

This is often overlooked including by many experts. But it’s a factor that shouldn’t be forgotten. Property markets are traditionally busy when the weather is fair. And traditionally busy in spring and summer so families with children can get moved in before the new school year in September.

As long as market sentiment stays positive?

Very important is buyers’ sentiment regarding the future of the property market. If people feel that prices will continue to rise they are more likely to buy. If people feel that prices will fall they are probably less likely to buy. Or at least less likely to make strong offers.

It’s important to remember that buying a property isn’t always about numbers however. It depends on personal needs and tastes and sometimes even whims. People buy a home and that isn’t always based on rational things. Whether there is positive or negative sentiment has much to do with whether people want or need to move or not. And whether people decide to buy a house.

Probably the most important thing to bear in mind when asking how long this crazy property market will last is that there is not just one factor at play. But a whole host of different factors all working in combination with each other.

If you have any opinions on how long this crazy property market is likely to last feel free to post a comment, or email us with your thoughts. We’d be very glad for you to share your thoughts on the property market with our readers.


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