Following the Office for National Statistics announcement this morning that the UK’s economy has contracted for the second quarter in a row, putting the country into an official recession, Dr Walter Boettcher, Head of Research and Economics, at the real estate advisory firm Colliers International shared his views.
Dr Walter Boettcher, Head of Research and Economics, said: “Following this morning’s announcement crucially the financial markets have remained stable, as has bond yields and the price of gold. This is reassuring for real estate because it suggests that the recession announcement is unlikely to affect investment dynamics any more than they were already affected at the outset of the pandemic – real bond yields are still negative, prime UK yields remain internationally competitive and sterling still offers a discount.”
Today’s ONS figures reported a 20 per cent decline in GDP over the last quarter. Overall the UK’s economy is now 17 per cent smaller than it was in February.
“The real fallout from the economic shutdown on property is only likely to become clear in the Autumn when it will become evident whether property income streams are recovering,” Walter added. “Market sentiment will be impacted by the effects of the winddown of the Coronavirus Job Retention Scheme, the Government’s and Bank of England’s policy response, the Autumn Spending Review and, of course, the EU/UK trade deal. Let us also not forget the US presidential election which is an international bellwether. The real story for real estate is only likely to unfold in October and November.”