Shortage of homes means prices will hold up
Now that we are into 2017, it would be fair to say that there have been many factors in the past year that have caused many people to hold concerns for the UK property market. Ever since April 2016, and the introduction of additional stamp duty charges for people buying a second (or additional) property, there have been a string of events that have caused many people to suggest that the prices of property will fall.
Some factors that have impacted on the property market in the past 12 months include:
- The 3% additional stamp duty charge on some properties
- A range of factors impacting on landlords
- The uncertainty over the EU Referendum
- The fallout of the Brexit vote
- The falling £
These are all reasons why property market experts believe that the price of property will fall, and this can be seen in the prediction of many professionals. However, no matter the influence that these factors have had on the market, there is one key element that means prices will hold up.
A shortage of homes in the UK
Quite simply, the shortage of homes in the United Kingdom means that house prices will hold up. This is a very basic economic example of what happens when supply cannot keep up with demand and ultimately prices rise or stay up to balance out the difference between supply and demand. There is a lot more to it than that but to get a quick understanding of the property market, you will find that until there are enough homes being built or developed to meet the demand of the UK population, prices will stay as they are or rise.
Some of the factors that impact on demand for property include:
- The population of the United Kingdom is bigger
- People are living longer
- Families are more fractured requiring more homes
- A larger student population
It is good that people are living longer and it is positive that there is a larger student population, so these factors are good for the country, but they do have an impact on the demand for homes. The changing nature of the common family is also a factor that has to be considered when looking at why the demand for property is on the rise.
The family unit has changed
The level of divorce, separation and split families means that a family unit which would have been housed in a single home are now spread out across two or three properties. This has been a change in society and this has impacted on the need for property.
It is also important to be aware that while there are property developments happening all across the UK, these may not be the right sort of developments to aid the market. Property developers are commercial companies and they are looking to maximise their profits. There is more money to be made on high-end properties and luxury apartments, so it makes sense for these businesses to act in this manner. If a property development company had shareholders and they weren’t acting in a manner which maximised profits or return, they would be ailing in their duty to their shareholders.
However, there is a need for affordable housing and if commercial firms aren’t going to meet these needs, the Government and local authorities have to do more to ensure that the right homes are being built.
Until more homes are built in the UK, and affordable homes to meet the needs of the people crying out for property, the price of homes is expected to rise.