Property has always been considered and nearly always proved to be the most stable and sustainable investment an individual can make. However, we are not living in the same world as a month ago. We have been saddened and shocked by the unfolding events and our thoughts are with the people most directly affected. Just as we have seen recently with other global tragedies and disruptions such as Covid-19 and Brexit, there are many consequences beyond those impacted personally, ones that disrupt the global supply chains. Yet, against many predictions, the Southeast doesn’t seem to have been inflicted anywhere close to those forecasts.
However, the uncertainty over Brexit and Covid was far less predictable than the one we face today. International sanctions have already caused huge rises in energy costs and with energy being one of the largest components of materials for manufacture, the supply cost of building materials can be guaranteed, and therefore passed on to the consumer.
New builds or lack of, will mean the continued shortage of flats and houses will see the ongoing supply outweighed by the demand, with a likely shift in extra sellers and buyers coming from those wishing to downsize in order to bring their living costs down, or those wishing to upsize in order to make their home a more workable unit; since unprecedented numbers will be working from home in the foreseeable future, with lockdowns dictating a new employment and freelance model. Then there are those who simply want to sit tight to what they have against those who will not be outpriced by the new mortgage rate hikes that will likely come into effect.
This has led to a big question: should I buy a property now or later?
To combat rising inflation, the Bank of England has put the base rate of interest up from a historical record low of 0.1%, and since December, increased to 0.25%, then to 0.5%, and now to 0.75%. These rates still remain incredibly low and mortgage offers are still very attractive. It is likely that with increasing inflation, we will see higher interest rates and more expensive mortgage products, with fewer people able to take on new mortgages. An overnight drop-off over any short period of time is unlikely, but a prolonged reduction in the number of property buyers in the UK due to higher rates could see the acceleration of house prices slow down over the next few years.
Our view at Eureka Property is to buy with a longterm view and take advantage of the rates currently available. Property stil remains the most stable investment.