Bizarrely, the pound strengthened on the news and there was little movement in the markets.
It goes to show how serious things are when the markets take heart from a contraction in the economy of 0.2%. Yet, those are the times we are in.
Only last night, Sir Mervyn King touched upon one of the major reasons for the on-going low (well, negative) growth environment in which we are mired.
Speaking in Brighton, he said: “Households as a whole have been net savers, rather than net borrowers, for each of the past three years.”
Consumers, in other words, are being cautious – perhaps more cautious than ever. It’s exactly this caution that has put the brakes on large parts of the mortgage and property markets.
However, can you really blame people for this caution?
The current environment, with a contracting economy, high inflation and rising unemployment, not to mention a eurozone on the brink of implosion – alluded to in this morning’s Monetary Policy Committee minutes – hardly inspires people to upsize and commit to a higher monthly mortgage payment.
Instead, they’re choosing to sit on their hands and wait for things to improve.
Unfortunately, for the mainstream mortgage industry, this latest GDP number will likely see this trend of caution continue, if not accelerate. Purchases are likely to be put on hold once again.
The fact that inflation is falling means interest rates could stay lower for even longer as well, which will potentially hit the remortgage market. But at least buy to let could benefit, as the masses of people unsure about buying continue to rent.
While the owner-occupier market looks like it could be in for a tough time during 2012, it’s a year shaping up to be a time of opportunity for property investors and the brokers that work with them.
Falling house prices (and they are likely to fall further with today’s data) will throw up no end of bargains, while consumer caution will mean rents continue to stay high.
It’s a bad market, yes, but there’s still ample opportunity for those who grab it by the scruff of the neck.
Mark Posniak is head of marketing and operations at Dragonfly Property Finance
