The Good Times Will Roll Again
- The UK has just been in a deep recession and is racking up huge debts following a momentous global event costing countless lives.
- The Government announces massive spending on new initiatives and infrastructure to stimulate the economy and jobs.
- This is all being justified by much lower interest rates and new trends in lifestyle and culture, but a lost generation of young people are becoming increasingly disillusioned.
- Meanwhile over in the United States, a new president is getting set to bring back a return to more normal times.
This is the start of a new decade, but this is not 2020 -its 1920!!
Yes, this was what our citizens were facing exactly 100 years ago and this was the decade which went on to become known as “the Roaring Twenties’.
History has a habit of repeating itself and here are a few reasons from the history books which I think will mean that it will do so again and lead to historians perhaps ultimately calling the 2020s the ‘Rip-Roaring Twenties’.
The 1920s were marked by economic prosperity, wealth and excess based on post-war pent up demand. Those of you who follow my blogs will know that Iast month I forecast that 2021 and 2022 may follow the same route based on a post- Covid pent up consumer demand. This will also spill over into areas of retail, hospitality, travel and property.
This is backed up by studies showing that natural disasters can affect survivor’s economic behaviour, living like there’s no tomorrow in what’s known as the ‘carpe diem’ effect in the short to medium term.
I expect a great number of our citizens may well experience that effect to become the ‘no tomorrow brigade’.
In fact, consumption of alcohol figures are already showing some signs of ‘no tomorrow’ behaviour. The October 2020 Institute of Alcohol Studies Briefing Paper references recent data from UCL’s Alcohol Toolkit Study showing an increased prevalence of higher risk drinking since the pandemic began, with the Royal College of Psychiatrists estimating more than 8.4 million people are now drinking at higher risk levels.
But anyway, back to property and despite the OBR this week predicting house price drops of 8% in 2021, albeit recovering steadily in 2022, this is based on cold hard stats and not on human emotion or behaviour. Other experts such as RICS and Savills predicted earlier this year sharp price falls in 2020, but were confounded when Lockdown ended and potential buyers were set free to push house prices up by 7% annually.
Compare the 1920s to what’s happening now:-
- The UK Government in 2020 is racking up huge debts but appears comfortable to do so given that borrowing is at much lower rates. They also seem comfortable with not tackling the debt by raising taxes and during a Capital Economics webinar in mid-November, Ruth Gregory, their Senior UK Economist, concluded that fiscal tightening via tax rises may not be needed. In his Spending Review last week, Rishi Sunak gave no such indications of fiscal tightening, and appears to be agreeing and holding his nerve in the wake of the usual intense media doommongering
- Boris Johnson announced massive spending on defence, infrastructure and the green revolution
- Modernity 100 years on is the Internet of Things, Online Shopping and Autonomous Vehicles and is being pushed by rapid technological growth via Artificial Intelligence, Cloud and 5G.
It’s not fashionable to be positive in these turbulent times, but I always try and look for the positives and I think I’ve found some clear positives not just for 2021, but for the years beyond that are based on history and human psychology.
The government is doing its bit and I think will protect house prices with an extension of some sort to the stamp duty if it is required in March next year. As the vaccination program is rolled out and we return to normal by April, those in work who have been working from home with very little to spend their money on, will spend those increased savings and property will be one of the main beneficiaries. Prices will be protected and may even increase as a result.
My one cautionary tale amongst all of this positivity is that the Roaring Twenties ended in 1929 with the Great Financial Crash globally which started the period known as the Great Depression in the 1930s and ended with a second world war!
In the meantime, though I think we can all look forward to a brighter, more positive UK with a proper return to normal in retail, hospitality and travel with property piggy backing on the feel-good factor.
If you’re running out of space and looking to upsize or perhaps have too much space and are thinking of downsizing, then why not complete Your Perfect Next Home Profile here and take those first steps today. I’m also available to provide guidance, support and recommendations via a free 121 zoom call and you can book a call here
I look forward to hearing from you
Founder, The Property Angel
Guiding & Supporting You To Your Perfect Next Home Simply & Stress-Free