I heard a rumour that the global recession is slowly becoming less of an issue as the world economic climate seems to be recovering ever so slightly form a terrible year in 2009. The London property market was one of the worst hit areas in the UK and now I'm wondering whether or not the property market will be recovering with the rest of the world's financial situation. I did some research and found that the influencing factors sway from negative to positive in a seesaw kind of pattern, each positive balanced out by a negative. Take a look:
The UK as a whole is definitely recovering from a tough 2009. Most businesses around the country are starting to recover and their employees are starting to have a little bit more money to spend each month due to a general drop in retail prices. However the unemployment rate in the UK is still continuing to rise which means just because companies and their employees have a little more money, jobs are still scarce as companies are hesitant to start hiring too soon. Unemployment rate is one of the major factors that affect London property prices will have a slight negative effect on London property prices.
The slight relief in the recession however means that that people are obviously feeling a little more financially confident and willing to start buying major assets (such as houses) again. Buying a house is an extremely emotional purchase and the fact that everyone is feeling happier about finance means that we could see a major increase in property purchases in and around London. This will have an immediate positive affect on the London Property market.
Although people have more money and property might start changing hands again, problems might still arise when people start applying for credit from major money lending institutions. Banks and money lenders are aware that the credit crunch is improving, however most of them are not quite convinced just yet which we can expect interest rates to still be slightly higher than we'd like, and this, once again will have a negative effect on the London property prices.
There's no doubt that there is money changing hands in the commercial sector. Due to the fact that businesses have a little more money to spare for the first time in ages, we can expect to see an influx of commercial property purchases in and around London. Commercial property accounts for a massive percentage of the property market and therefore London property sales will have a definite positive influence on the market over all.
As you can see it's really an equal case of negative factors vs. positive influences and they seem to just be leveling one another out. If you're looking to possibly buy a central London property right now or later in the year, my advice is to keep an eye on the market and follow your gut feeling. If you feel uncertain, don't do it just because people claim things are improving. If you're feeling hesitant, perhaps you can look for a London property to rent in the meantime until the situation is clearer.