Economics, Inflation, Recession, Mortgages & Your Home

February 21, 2024

Switching on the news today has never been more nerve wracking. From conflicts to national politics, everything feels like all doom and gloom.

So when news came out last week that inflation held at 4% (better than expected), the situation felt a little more promising. Yes, it was still double the Bank of England’s target, but it hadn’t gone up.

Then, just the following day, the UK was in a “technical recession”, which means that we all have less money to spend.

You can’t help but feel like we’re a little f*cked.

Well, we’re here to let you know that whilst it can feel this way, it’s not permanent and in our blog today we’re going to talk about what this all means and what is happening to homes around Chester and what it means for you moving, remortgaging and selling.

Let’s talk economics

Don’t worry, we’ve left our elbow patches at home and we’re going to try and explain it the way it was explained to us at the pub the other evening – because that’s how we understood it anyway.

Inflation is about how much the cost of goods and services increases over a given period of time. It is measured monthly by the ONS (Office of National Statistics). It’s one of the economic indicators about how much things cost and where prices are either increasing or decreasing.

Think of your favourite chocolate bar and how much it cost in 2022 and how much it costs now. That’s inflation.

A technical recession is measured as back-to-back quarters of contracting GDP. Gross Domestic Product (GDP) is a measure of the value of goods and services produced in an economy which estimates the size of growth in the economy.

Think of baking bread and selling it. That’s adding to GDP. If you baked bread and kept it for your family, that’s not adding to GDP.

Interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed. We see this on things like credit cards, loans and yes, mortgages.

Think of it like borrowing £1000 at 10% interest. It means you pay back £1100.

We also have to remember that economics is all based on cycles.

What feels bad today won’t in a year or so as economies rebound and rebalance.

Woman paying for goods with smart phone


How does it all tie together?

The better a country does economically, the more money people have in their pocket to spend on things and vice versa. You can make better long term planning decisions and there is a better sense of security involved in that decision making process.

Governments have different instruments to try and help the economy grow. More investment in infrastructure has helped America for example over the last 2 years.

And what about the housing market?

Well, we’ve seen the impact of soaring interest rates over the last 16 months taking from record lows back to pre 2008 rates.

This means that buying a home becomes more expensive as the repayments become more expensive.

Image of a for sale board outside house.

Does this mean I can’t sell my house?

No, not at all.

Selling your house is about many different factors. Being priced correctly, marketed to the right people and buyers and also sometimes, timing.

Yes, it can be argued that if the economy is better there is more money to go around and people feel committed to making long term commitments about where they choose to live. But this could be used as a reason to never do anything so…

What happens next?

As much as we would love to predict the future – we can’t by the way – we can say that a lot of the noises coming from the financial experts include;

  • Interest rates coming down over the next twelve months – This would ease pressure on people paying on renewals and new mortgage holders. Some are predicting a rate reduction of 1 base point. (4.25% from 5.25%)
  • More investment into infrastructure projects – This means that the UK is going to take on board some of the work done in the US over the last 4 years to help spur economic growth.
  • Tax cuts – We are currently taxed at the highest rate since WW2. Many want tax cuts but to fund any growth or expansion in the UK economy this may stoke inflation concerns.
  • These are by no means advice or gospel. None of the above may happen and something totally different may take place, especially with the prospect of a change of government over the coming 12 months.

Is everything just a bit sh*t?

It can feel this way but… no.

At the start of the year lenders were slashing their long term fixed deals to below 4% which for us indicates that interest rates will come to this level and even lower in possibly the next 24 months.

If you are selling, demand is outstripping supply – still! This means that house values remain at a pre-pandemic level and have stabilised.

If you are buying, lenders are working on different products to incentivise purchases and making them more affordable over a longer period.

We also have to remember that buying a home is more than just buying some bricks and mortar. It’s about where you choose to live, the environment you want to live in and where you want to make memories. It’s easy to get distracted and feel like everything is going against you but when we think about homes, they are that… a home.

Chester Housing Market

The Chester housing market is seeing a small difference in values compared to January with the average asking price down 1.7%.

The average asking price – as according to Get Agent shows the following.

House Size Average Sold Price
1 Bed £270,296
2 Bed £237,264
3 Bed £321,040
4 Bed £538,830
5 Bed £777,563

Some breaking news

In the time of writing this and getting it published, some other economic data has hit us all. UK Retail sales were double than expected at 3.4%.

Economists are saying that there is growing confidence in the economy even though it has gone into recession.

To conclude

Yes, the news is not good – most of the time – but that shouldn’t be the only thing to look at when you’re making any decisions, let alone your home.

When you’re buying a home you’re making a long term invest so no matter what the news is saying today, it won’t matter in a few years time. You’re buying a home which is more than just the roof over your head, it’s where you will have a community and where you will spend the most of your time when you’re not working.

Right now everything is about trust and as the leading estate agent in Chester in CH1, CH2, CH3, CH4 we know the market and what people are looking for. Don’t hesitate to get in touch with our team who can help you throughout the whole process.


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