Current Market ‘in Complete Contrast’ To 2008 Financial Crisis

The current situation in the property market bears no similarity to the downturn brought on by the financial crisis, according to Damon Bullimore, CTO of Nurtur Group and founder of BriefYourMarket.

Bullimore says that the core difference is that in 2008, there was an “institutional crash” with no monetary flow in the market and banks withdrawing funding. “This is in complete contrast to what we are seeing today,” he said in conversation with Iain McKenzie, CEO of The Guild of Property Professionals.

“What we are seeing in this market is a reaction to a poor mini-budget which had a direct impact on the market, an impact we have seen pull through in the data with the number of fall-throughs trebling,” Bullimore added. “However, I am pleased to say that was a short, sharp shock and directly correlated to the mini-budget.”

Despite rising inflation resulting in higher interest rates, Bullimore insisted that the market is heading for normality rather than a crisis.

“There is some interesting data that suggests that unless interest rates rise to over 8%, there is no direct correlation between interest rates and the housing market,” he explained. “I think what is important to say is that 5% to 6% interest rates, which is where I think they will stabilise, is actually a normal market, especially when looking at historical data where we see interest rates north of 14%.”

Bullimore argued that “5% to 6% is still considered a good rate at which to borrow money”, adding: “It is obviously more expensive than what we have seen over the past years, but still far more accessible than 14%.”

Citing BriefYourMarket data from the last month, Bullimore observed that there are still over one million properties on sale, and that from 1 October 2022, 147,161 came to the market. “This points to the fact that there is still activity, with 103,012 properties that were sold subject to contract during that time frame,” he said. “I still believe based on this data that next year we will see post a million transactions.”

McKenzie agreed that transactional volume was important.

“We know that good agents will navigate the waters of price increases or declines, but transactional volume is the important thing,” he said. “Good agents will always thrive and survive, so now it is about focusing on the day-to-day aspects that will benefit them in the current market.”