A recession is defined as two consecutive quarters of negative economic growth. But, economists have already stated that once the figures are adjusted, it is far from certain that they will show a negative and hence a double dip.
The underlying strength of the economy is probably more robust than the official first estimate suggests. Whilst many have jumped on the news as a sign that the property market will spin into a state of panic, Strutt & Parker believe that there is less reason to worry and that in reality the majority of buyers and sellers will be only marginally affected.
‘The reality is that recession is a normal, if unpleasant, part of the business cycle. Business sentiment has improved markedly since late last year and, despite all odds, houses are still selling,’ said James Mackenzie, head of the Country house team at Strutt & Parker.
‘London continues to defy the odds with prices increasing steadily and strong international interest; and now too outside London, even with limited growth in GDP, more property transactions are taking place as people become accustomed to the cyclical nature of the property market,’ he explained.
Mackenzie believes that people and the market have become resilient. ‘What must not be forgotten is that the vast majority of people are buying a home for their long term future, not for the next year. They are looking at the long term picture and although they will of course factor in the current economy, it is unlikely to stop them from buying the house of their dreams at the right price in their ideal location,’ he said.
‘In some ways this could even help parts of the market as interest rates are likely to remain at their current low level and this will hopefully help first time buyers. This in turn will activate the market chain and the results will be felt over time gradually moving up the chain,’ he pointed out.
‘The market will continue to do what it has been doing since the original problems in the beginning of this latest cycle, keep ticking over, and although it may be marginally lower in some areas, the overall state is unlikely to be markedly different,’ he added.
