In the UK people are gradually being let off the leash as the lockdown begins to end. It seems that the full lockdown phase of the Covid-19 crisis is drawing to a close.
It’s still not clear how the end of lockdown will go. In other countries such as South Korea, they are shutting down parks and schools for the coming weeks due to new spike cases.
At home in the UK, we don’t need the property market to be perfect. We just need things to get better than they were. Nobody can predict the future, but we can look to the future. So it’s not about how bad today is, it’s about whether tomorrow looks worse or better. And for the time being, tomorrow looks better.
Of course, at some point, the market’s expectations shift to the level where a better tomorrow is entirely priced in. And before much longer, you get to the point where the market is over-optimistic.
Three things could cause trouble
One is that the end of lockdown goes badly: maybe we get more outbreaks; maybe we realise that it’s one thing to end lockdown and quite another to get people moving again.
The second is a lot of government debt is being issued. Central banks are going to have to stay on the ball to make sure it all gets digested smoothly. It’s easy for glitches to occur during the process.
The third is that investors might start to pay attention to all the other genuinely worrying things that are happening. The deteriorating relationship between the US and China, the end of Brexit.
Understand how these issues can affect your portfolio and what you need to do to protect yourself and your money
My advice, stick to your plan. What does this mean for you as a property investor? We’re not trying to second-guess the market here, we’re just trying to think about potential scenarios to avoid panicking when and if they arrive.
A very large part of investing is keeping a grip while everyone else appears to be losing theirs. That’s why it’s useful to think about these things and have a protection plan to shield yourself from the worst-case scenario.
In my view, it feels like the risks are now a bit more balanced, the initial rush to bag a bargain is over, and we probably require a bit more clarity on the path of the recovery.
So it’s time to feel confident, but undertake a strong risk management process before deciding to buy. If you do so and stick to your plan, you will do well until the market is back in full swing.
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