housing

Factors that affect the housing market

Factors that affect the housing market

The housing market is influenced by the state of the economy, interest rates, real income and changes in the size of the population. As well as these demand-side factors, house prices will be determined by available supply. With periods of rising demand and limited supply, we will see rising house prices, rising rents and increased risk of homelessness. Factors determining house pricesMain factors that affect the housing marketEconomic growth. Demand for housing is dependent upon income. With higher economic growth…

Housing market crash

Housing market crash

Despite housing being a secure asset, the housing market can be prone to bubbles and periods of rapidly falling prices. In recent years, the period 2005-09 saw a prolonged and significant fall in house prices in both the US and Europe.A housing market crash can be precipitated by a change in economic fundamentals (higher interest rates, lower growth) and/or a change in market sentiment (confidence turning to pessimism. What causes housing market crashes? Essentially a period of falling house prices occurs when…

Impact of falling house prices

Impact of falling house prices

A look at the economic impact of falling house prices. Readers Question: Explain why a decrease in the price of houses can lead the economy to experience a recession. In summary: falling house prices reduce consumers’ main form of wealth. This tends to cause lower spending and lower economic growth due to a negative wealth effect. Falling house prices tends to have a significant impact in the UK because of the relative importance of the housing market.

How the housing market affects the economy

How the housing market affects the economy

A look at how the housing market, and changes in house prices affects the rest of the economy. In summary:Rising house prices, generally encourage consumer spending and lead to higher economic growth. A sharp drop in house prices adversely affects consumer confidence, construction and leads to lower economic growth.Real house prices UKChanges in real house prices Wealth…

House prices post Brexit

House prices post Brexit

How will UK house prices be affected by Brexit – in both the short term and long-term? In the past few decades, the UK property market has been characterised by a long-term rise in real house prices. UK house prices have risen faster than inflation – especially in London and South.  In fact, we could really talk about two separate housing markets – London and the rest of the UK. Summary In the…

Immigration and housing

Immigration and housing

Is net positive migration a factor behind the UK’s recent rise in house prices? Given rapid rise in house prices since mid 1990s and corresponding rise in number of immigrants, it is hard to avoid the conclusion, levels of net migration are having, at least, some effect on exacerbating the UK housing crisis. However, there are also interesting studies showing that high levels of net immigration can lead to lower house prices in certain localities as native homeowners move elsewhere.   Generally, economists find net immigration has positive benefits, with limited…

UK Housing Market

UK Housing Market

A look at the main UK housing market data.House prices Affordability of housing Interest rates Supply of housingHouse price inflationNationwide dataAnnual house price inflation running at 5.3% in Q1 2016 London showed strongest housing market with prices rising more than other areas. Price of a typical home is £198,564 (Q1 2016)UK House prices in past few decadesIn 1969, average house prices were: £4,312 In 1975, average house prices were:…

History of UK Housing

History of UK Housing

A look at the major trends in UK housing in the past century, including the trends on housing tenure, house prices and the supply of new houses. Victorian housing The Industrial revolution saw rapid growth in inner cities as people flocked to the city for new factory jobs. This accommodation was often hurriedly built by private enterprise and was often  squalid, with large factory populations squeezed into small areas, leading to the classical slums of ‘Dickensian’ Britain.