Should I be buying now?!

Sebo027

homeless9 said:

At what point does all this impact on house prices? Surely it should already be impacting the market?

That's a great question. First a caveat: no one knows and historical trends do not necessarily correspond to future behaviors.
To try and understand the relationship between housing prices and economic slowdown I went to HometrackUK and Tradingeconomics.com and looked up some historical data.

Housing Prices vs FTSE100

Notice that the FTSE100 crashed in 2002 - the dotcom bubble bursting - and notice:

• The crash did not have an immediate effect in the UK housing market.

• Housing prices continued to rise, steeply, at the "bottom" of the crash.

• The rate of housing price increase slowed a couple of years after the "bottom". 

• Housing prices and the FTSE100 correlate almost perfectly in the 2008 crash - I suppose not surprising because it was caused by toxic lending of mortgages in the housing market.

Below is the same graph, except showing data for one year only. 


You cannot see from these graphs if there has been an impact. I do not know how often the figures for the housing market are published - I think it is each quarter - and you can see the graph here doesn't run long enough to give any indication. 

Will the current COVID-19 / oil price crash affect the housing market? It seems it would be more difficult to move house during the lock down, more difficult to buy, more difficult to sell. So then I would think, the potential for impact on the housing market, like everything else, increases the longer the COVID-19 fiasco carries on. Not to mention the specifics of sector - rate of new builds, government lending schemes, help to buy etc. So in short no one knows, here's one opinion that can provide a bit more insight than I:

https://www.forbes.com/sites/garybarker/2020/03/10/coronavirus-how-it-could-affect-the-housing-market/#4e0e73ab564c

UK Housing Prices

The chart below shows housing prices across the UK, with specific data across various cities/regions including Glasgow, Aberdeen and the South East. Notice:

• No significant impact in 2002 or the years immediately after.
• Consistent, unilateral affect of the 2008 financial crash across all areas.
• London and the South East far outperformed the UK average between 2010 and 2016. 
• Aberdeen was acutely affected - and continues to be affected - by the the oil downturn in 2014.
• If you'd purchased in 2007, it would seem like the world had ended in 2008. Six years later, in 2014, housing prices across the UK had, as an average, recovered.
  

UK Housing Price (Longer Term)

For the purposes of perspective, it's worth looking at the longer term behaviour of the housing prices in the UK. 


It sounds like you want the property. How would you feel if you received a call tomorrow saying it had been sold to someone else? Based on all of the above, if you are secure in your employment and are confident you can continue mortgage payments for the next five to six years, I would probably go for it and enjoy the place. Enjoy a summer BBQ given all the restaurants and bars will be shut. It's easy for me to say, though, but it's you who will be living the consequences. 

Anyway, I hope that helps.