housing

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:…

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…

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House prices and interest rates

Interest rates have a strong influence on house prices, principally because changes in the interest rate affect the cost of mortgage payments. How do interest rates affect house prices?If interest rates rise it will have a significant effect on increasing the cost of mortgages. Higher mortgage payments will deter prospective home-buyers – it becomes relatively cheaper to rent. Also, the high cost of mortgage payments may also force some existing home-buyers to sell. This increase in sellers and decline in buyers will cause house prices to fall. See also:…

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Why are UK house prices so high?

In recent years, we have had a devastating global credit crunch, the longest and deepest recession since the 1930s (if not worse). Across Europe, we have seen mass unemployment and in countries like Spain, Ireland and Portugal, the housing market has seen up to 50% falls in house prices. Yet, despite this financial and economic upheaval, UK house prices have bucked the trend, avoided a major collapse and now exceeded pre-crash levels. It is true that in the first years of the credit crunch, UK house prices did fall 20%….

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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 tend to have a significant impact in the UK because of the relative importance of the housing market.

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…

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Immigration and housing

Is net positive migration a factor behind the UK’s recent rise in house prices? Given the rapid rise in house prices since the mid-1990s and the corresponding rise in the 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…

Consequences of generation rent

Consequences of generation rent

Generation rent is a term to describe how many young people are unable to buy a house, but need to privately rent. Since 1993, house prices have risen significantly faster than incomes, making a mortgage out of reach for many people under the age of 30.Rising ratios of house price to earnings for first time buyers (FTB). The UK has one of the most expensive housing markets…