Why the housing market keeps defying political and economic turmoil - Mark Manning
Global uncertainty has dominated headlines in recent years, but despite economic and political turbulence, the property market has continued to show resilience and perform strongly.
From the Covid pandemic to inflation shocks, multiple changes in Government, and wars in Ukraine and across the Middle East, the outlook has repeatedly shifted.
The period of recent uncertainty really began in 2016 with Brexit. Following the referendum vote came the resignation of David Cameron and then later Theresa May, before Boris Johnson became Prime Minister in July 2019.
Less than a year after Boris romped home with a landslide victory, Covid happened. The housing market briefly ground to a halt during lockdown, but what followed was one of the most dramatic rebounds ever seen.
Months spent at home changed priorities overnight, with buyers having time to think about what they really wanted from a house and many deciding they wanted more space. At the same time, Government intervention played a pivotal role. The stamp duty holiday acted as a catalyst, restoring confidence and accelerating transactions. Combined with historically low interest rates and savings built up from furlough payments and staying at home, it helped create a surge in activity across the end of 2020 and into 2021.
The post-Covid boom highlighted something fundamental about the market – the need for people to move is always there regardless of wider uncertainty.
This resilience was tested again in 2022. Russia’s invasion of Ukraine sent shockwaves through global energy markets, driving inflation up and triggering interest rate rises. The cost-of-living crisis followed, putting pressure on household budgets and mortgage affordability. Buyers became more cautious, and activity slowed.
Then came the disastrous Liz Truss mini budget, which created immediate instability in financial markets. Gilt yields surged, mortgage products were withdrawn, and pricing shifted almost overnight. It remains one of the clearest recent examples of how political decisions can directly impact the housing market. Confidence dipped sharply as rates surged.
However, the market did not collapse. It slowed due to a reduction in demand, but then adapted and came out the other side, rebounding through 2023 and into 2024. Unlike the financial crash of 2008, when lending almost dried up entirely, finance has remained available throughout this cycle. It has become more expensive, but as long as lenders are willing to lend, the market continues to function.
More uncertainty came again in 2024, with the General Election and global tensions beginning in the Middle East.
Fast forward to today, and we’re now facing even more uncertainty due to the further escalations in the Middle East and more chaos in Government. However, despite a slight slowdown as people wait to see what happens, buyer registrations are holding up well against long-term averages and people are still moving.
The truth is that in recent years there is a consistent theme that stands out – although buyers may sometimes pause, reassess or become more price sensitive, the market adjusts accordingly and buyers never disappear.
Ultimately, the housing market is underpinned by something far more powerful than geopolitical situations, and that’s the fundamental need for homes. That’s why it has continued to move forward, proving that it is more resilient than many assume.
Mark Manning is managing director of Manning Stainton estate agents