The real estate business is the most lucrative sector in any part of the world. It has been the most flourishing business in the UK and has only progressed extensively with time. Real Estate contributes to a substantial part of the UK economy with investors from local regions and across the globe.
Be it residential units or commercial projects, people have shown interest in this business in the UK, especially in Central London. The number of people working directly or indirectly in the real estate sector has increased in the last few years.
Agents working in this sector are involved in buying and selling a property, finding the right people to rent a home or helping with leasing a site. Despite the 2019 pandemic, this sector was quite active compared to other businesses in the UK.
With estate agents in Aylesbury, Buckingham, Lancashire, and every other region in the UK, it has become more effortless for people to go forward in their property buying and selling journey even if they are not aware of how and where to begin.
It is not easy to predict the property prices or the future of the housing market as there might be a sudden change that might take place at any point in time.
PROPERTY PRICES OVER THE YEARS
The property market in the UK has always caught the attention of millions across the world. After remaining stagnant for a while, the housing market geared up slowly in the mid-’00s. Many people started investing in UK properties, which boosted the market value to a great extent.
However, the property prices kept wavering till the year 2008, followed by a significant downfall in 2009, which was considered the appalling price collapse in several years. The recovery period of property rates was short but didn’t remain stable.
With time, these prices continued to rise and fall for a long while. The 2019 pandemic affected the property market to a great extent due to the increasing levels of unemployment and crashing of the UK economy.
Unlike previous years, 2019 had very few sales leading to the decline in property prices. By the beginning of 2020, the situation in the country had normalised, and people started hunting for new homes in the countryside.
The sudden demand for properties brought about a remarkable change in the housing market. The average house prices gradually soared upwards in the last decade, reaching a record high in June 2021. Many elements influence the property prices in the UK, that cannot be reversed or controlled for a certain period.
FACTORS THAT DETERMINE HOUSE PRICES IN THE UK
Property prices do not change on their own. Multiple factors affect the housing market and create a tremendous impact in the long term.
CHANGE IN INTEREST RATES
It is a well-known fact that purchasing a property is a long term commitment. Repaying the mortgage loans involves monthly interest rates that cost a hefty sum.
Low-interest rates with higher LTV are more affordable for buyers, which will increase the demand for properties in the country. With a lower percentage of initial deposits, the demand will remain at its peak.
DEMAND FOR PROPERTIES
The number of people living in the UK and the number of households are facing an imbalance for a long time now. People’s preferences have changed, which has altered the demand for properties in an entirely different way.
People are starting to earn at an earlier age now, and are becoming independent. Single resident households are growing more compared to families. Likewise, divorce rates and life expectancy also impact property demand.
COUNTRY’S ECONOMIC STATUS
Property market functions based on money. An individual’s annual income and the country’s overall economic growth has a significant part in the evolution of the real estate business.
When there is a drop in people’s income or rising numbers of unemployment across the place, there will be fewer buyers involved in this business. This will decrease the demand for homes.
Applying for a mortgage has been the first decision made by a buyer. Previously, getting a 100% mortgage with low-interest rates was easier, which made the demand for homes in the UK go higher.
Due to the financial crisis that hit the local banks and the lenders in 2008, it was challenging to save funds for this purpose, and hence the lending conditions were tightened.
AVAILABILITY OF HOMES
Over the past decade, we can observe people splurging on properties of different types in the main areas of the UK or countryside. With continuous bargaining and sales taking place, the number of properties that are available is getting exhausted.
When the supply is minimal to nil, existing homes will have enormous demand, where too many people would make offers on a single property which directly boosts the market value.