It is fair to say most people do what they can to avoid ‘icebergs’, a metaphor best illustrated by the ill-fated journey of the Titanic.

Ayesha Ofori

I am no different. I seem to have developed a natural paranoia to identify and circumnavigate obstacles, adopted through always striving to be a high achiever. I like to think it is also a function of learning the rules of wise investing the hard way – through trial and (a lot of) error.

The government’s stimulus package triggered by the fallout of the Covid-19 pandemic (approximately £350bn so far and counting) has been staggering to say the least. The likely impact on inflation has given me a sense of confidence that real asset prices – in particular property – should be a big beneficiary over the medium to long term.

Recent figures paint an interesting picture: according to the latest Halifax House Price Index, residential property prices hit a new all-time high last month as the market gradually reopened after being put on pause during lockdown. The average price of a home was £241,604 last month, which represents a 1.7% jump month on month and a 3.8% increase from July 2019. This mini boom is likely due mainly to the release of pent-up demand being released post-lockdown with the euphoric recognition of a generous tax break adding a helpful tailwind.

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The effect of the property stamp duty changes (with no standard stamp duty payable on purchase prices up to £500k) have arguably compounded a perverse set of dynamics, which I think creates a false sense of market comfort.

Between now and March 2021, when the change in stamp duty is due to end, the country will have some serious issues to work through including: the 9.6 million people (approximately 30% of the working population) that have been furloughed as of 2 August 2020; the conclusion of an awkward set of Brexit negotiations that is supposed to be completed by year end; and the possibility of another wave of Covid infections that could unfortunately coincide with the winter cold and flu season.

Due to the lag in data reporting, these challenges could fortuitously make March 2021 the delineation of that cliff-edge moment when the property market takes the short-term tumble that seemingly looks to have been delayed but not eliminated. This timing prediction is further justified when one considers that the transition date for the 2% levy for overseas purchasers is due to come into effect in April 2021.

Hence, it seems increasingly likely to me that market pain will manifest itself at the end of Q1 next year, unless the government does something significant to buffer this (for example, by extending the stamp duty holiday period), which I think is definitely a possibility given how proactive it has been so far to keep the cogs of the real economy lubricated as far as possible, despite the fact the overall machine is currently only crawling along.

I am still optimistic for what the longer-term future holds for property particularly in the development sector but for now, with a bit of poetic licence, I’ll draw upon the famous words of the sombre fortune teller from Shakespeare’s classic play Julius Caesar: beware the ides of March.

Ayesha Ofori is founding director of Axion Property Partners