How have house prices changed?
House prices have changed dramatically over the last few years due to many different reasons. It’s not just food prices and bills but property prices over the UK have risen by 7 percent since 2020 which is 5 percent more from the previous years. This years house prices are putting off first time buyers more than ever but why is this?
Was it COVID?
The pandemic which started back in 2020 affected the price of houses hugely and is one of the main causes. With the UK’s economy being put on a hold for almost a year it meant for some buying property to be put on hold too and as we know the pandemic lasted much longer than expected. This made house prices fall dramatically back in 2020 which is now why the prices are booming because the property market are experiencing high demand now and need to make their money back. The affects of COVID are still affecting the property market today.
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Low interest rates
Low interest rates makes people want to buy a house over rent just because it means buying a house can give you better returns. Since 1992 interest rates in the UK have fallen from 15% to 0.5%, making the cost of getting a mortgage much lower. Low interest rates makes it easier for people to borrow from the bank therefore makes it easier for people to pay for mortgages and buy houses. In addition to this gives the property market to up prices and boost their income. This is banks lending was a major driver of the massive increase in house prices.
When houses are not built quick enough to meet demand
Sometimes there are reasons why houses are slowed down in the process of building, it can be due to not enough equipment, planning permission etc. This then causes house prices to go up because there aren’t enough houses on the market to sell so the houses that are on the market need to make more profit. The more houses built the cheaper houses are because more supply means more demand.
According to the OBR (Office for budget responsibility) house prices might fall by 10 percent over the 2 years. This is due to high mortgage rates and house hold incomes.
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