House prices: Is a recession a good time to buy a house?

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The UK is in the worst recession since records began, the ONS confirmed today, as GDP shrank by 20.4 percent in three months to the end of June by 20.4 percent. Coronavirus and the resulting lockdown caused significant financial upset, and people are debating as to what they can do following the latest news. Many may have already embarked on the process of buying a house, but a recession casts uncertainty around the property market.

Is a recession a good time to buy a house?

Recessions cause an unstable environment for many financial ventures, amongst them buying into property.

A recession is generally considered a bad time to buy a new house, as wages are lower and many more people will find themselves out of a job.

But experts have noted pros and cons to buying a house during a period of economic downturn.

Express.co.uk breaks down the advantages and benefits of entering the housing market during a recession.

According to Gay Cororaton, director of housing and commercial research for the National Association of Realtors in the US, house prices fall during a recession.

She said: “Recessions, such as the recent Great Recession of 2008 through 2010, depress home values.

“That’s because recessions lead to loss of jobs and income, and when people lose jobs, they won’t make a long-term investment such as a home purchase.”

While this may seem like a good thing for a buyer, there are some drawbacks to consider.

If house prices fall, people often choose not to sell their homes as they risk doing so at a loss, so the inventory is lower.

Those homes which do go on the market may end up as a bad deal, with some potential issues.

Many of these will be purely cosmetic, but people may find agents try to sell a house for more than it is worth to offset changes brought around by the declining GDP.

Anyone looking to buy a home will need to pay extra attention during a recession, as they may end up with a lower quality property.

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