Property prices less volatile than stock markets
Residential property prices have not risen or fallen as sharply as stock markets since the last downturn in 2008.
1 minute to read
Buyers and sellers are still considering how best to react to the Covid-19 global pandemic.
For transactions underway, some are going ahead as planned, some have been paused and others have halted altogether, as we explore in more detail here.
Looking at global financial markets, there will also be some uncertainty among those looking to buy or sell over what any downturn could mean for prices.
However, there is an inherent conflict in trying to compare property and stocks.
Share trading can factor in worst-case scenarios while pricing in residential property markets tends to rely on comparable evidence, which by its nature is historical.
You can’t look at a Bloomberg terminal to get live updates on the value of your home.
Furthermore, property takes a lot longer to transact and this lack of liquidity is precisely why real estate is an essential part of many investment portfolios.
It’s also what makes property prices less subject to sharp rises and falls compared to stock markets.
The chart above shows the quarter-on-quarter percentage change in the FTSE 100 versus the Land Registry index for the UK as well as Knight Frank’s prime central London index.
The lack of volatility in property pricing during and since the last global downturn in 2008 is notable.