First of all, it's important to note that recessions are a common economic cycle that will end. What you can do during this time is educate yourself on what a recession is, how it will affect your immediate state and how to look at property purchases down the line. By empowering yourself with this knowledge, you'll be well informed on any financial decisions.
What is a recession?
This is simply when an economy starts to slow down to a point where it's no longer growing. The unofficial rule is when there are two consecutive quarters of negative GDP growth (i.e., the economy is not growing).
Of course, it can be longer than that before a recession is declared but, with the current economic outlook, it appears that the U.K. is on the verge.
This means that businesses will start to shrink, and the overall economy will slow down to a point where the price of goods and services will begin to drop. What is currently happening now is that interest rates are being raised to combat inflation but instead are making the price of goods expensive. It's a combination that is causing weakening purchasing power. Eventually, this leads to less spending, a weaker economy and that dreadful R-word known as recession.
It's not permanent
As mentioned before, recessions are a recovery period that lasts much shorter than growth markets and years. As a result, it may cause some economic strain on people, but eventually, it will start to cycle to a point where the cost of items is so low that people are spending more, leading back to that growth that everyone has enjoyed for over a decade.
That means it's more important now than ever to think strategically about what to do. For example, how healthy are your finances , and how to best navigate the property market? Are there opportunities to be found even in a recession-based market?
With so many questions, all you can do is continue to educate yourself. But to answer the primary one, we’ll start to see those red hot property prices go down, and that is one of the areas where you can get a great deal, even with slower economies, for your next home purchase. Because fewer buyers will be involved, it gives you a prime opportunity to grab a great deal.
Be mindful that the rates have gone up to stem inflation and, at the same time, have raised the cost of the mortgages. Yet with fewer buyers and a quieter economy, the price of homes should inevitably fall. That means you don't need to wait until we're in an economic recovery.
It's a good idea to work with licensed professionals across the board who can do all the necessary checks and verifications for your home purchase. You want to ensure that whoever you're buying the home from has the right to sell you the house and isn't selling it to you under false pretences.
This may seem like a simple confirmation, but documentation can easily be duplicated or forged with the right type of technological equipment, so you will want to avoid buying a home that you later cannot legally lay claim to.
You're already going to work with an estate agent that will handle the sales price and the initial paperwork. This also helps give you the best-negotiating power during this market, as your advocate pushes down the lowest price possible. So with that covered now, it's all about working with someone to help with the legal matters and confirmations.
That's where you want a conveyancer present during the home sale process. This provides you with a level of protection, knowing you're going to get that deal of a lifetime and that nothing is happening behind the scenes to try to pull you away from your funds in an unscrupulous manner. Your conveyancer should spot any anomalies in paperwork which you might otherwise miss and will ensure your money gets to the right place.
This, in turn, will help to accelerate growth again, instead of people waiting for the economic growth cycle to occur. It's imperative during these uncertain times to keep the flow of the housing market active, as this will be the jump-start to get us out of the recession when it happens.
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The information contained in this article does not constitute financial advice or recommendation and should not be considered as such. Arrow conveyancing does not offer financial advice and is not regulated by the Financial Conduct Authority (FCA), the authors of this article are not financial advisors and are therefore not authorised to offer financial advice.