Top 10 factors affecting Property Prices in United Kingdom

1. Top 10 factors affecting Property Prices The housing market is just that – a market for housing. Just like other markets, the value of the products being sold is affected by external factors. Take the value of oil, for example. This is affected by a number of key factors. One is the demand around the world. This is generally high but can be influenced by factors such as wars and localized troubles, difficulties with transport, the automobile and aviation industries’ needs. In fact, the value of oil is tied up in a complex global web of inter-reliant industries. Small changes in one area can have a big impact on oil. Now, if we go back to the housing market, we can start to think about the external factors that determine value. Like anything, the property is only worth what people are willing to pay. But the amount that people will fork out for a home varies a great deal. Here’s a closer look at ten of the most important factors that affect Property Prices. The economy The overall state of the economy perhaps has one of the biggest influences on the housing market. During times of trouble, when jobs are being lost, salaries frozen and uncertainty

2. rules, people feel less willing and able to buy a new home. This in turn reduces demand, and when that falls so do prices. When the economy is stronger, there is less risk and people feel more comfortable making big, life-changing decisions. Market cycles While historically the overall trend for house prices is to go up, if you take a closer look you can see that there are many more time-sensitive fluctuations within that. That’s because when prices start to fall, people wait to see what will happen. When they are low, they start to buy again. This creates natural market cycles. If you understand how this works you can make a lot of money in property. Unemployment Essentially a part of the overall economy but big enough to stand on its own, the unemployment rate can have a big impact on house prices. As unemployment rises, house prices tend to go down. In fact, even the fear of unemployment is enough to put a dent in the market. Interest rates These influence the monthly repayment rates for mortgages, so the higher they are the more expensive it is to borrow money. The lower interest rates get, the better it is to borrow, and the easier it is to buy – driving prices up. Consumer confidence As we mentioned above, it is the psychological aspect of the economy that is important. If people are confident in the market and think investments will go up, then they will buy. The reverse is also true. Mortgage availability Top 10 factors affecting Property Prices Most banks are keen to Lend money in the form of mortgages, especially when times are good because it is long-term profit. However, they have been guilty of irresponsible lending which has caused enormous economic damage. This tends to lead to lending restrictions getting tightened as happened after 2008, making getting a mortgage more difficult. Shortage of supply

3. The UK has a population of around 60 million, but it is also growing at a rapid rate. That rate is far outstripping the number of new homes being built. This means there is a shortage of supply, which drives prices up. Government policy Recognizing this shortfall, successive governments have pledged to build more houses. However, this has proved to be more difficult than they would have liked. Building more houses requires land and there are very few places in the UK where residents are happy about green spaces being carved up to put housing developments on. Recent planning changes by the government have been put in place to make it easier to renovate urban and industrial spaces for residential purposes. But there are concerns that this will lead to a bonfire of regulations and the creation of inner-city slum areas. Other government policies can also have a big impact on the property market. This includes things like stamp duty rates, which they recently increased for second homes. The creation of help-to-buy schemes also aids first time buyers to get on the ladder. In the 80s, the Right to Buy scheme helped thousands of people to buy their council property, although this did result in much of the public housing stock ending up in the hands of private landlords. Land supply The cost and availability of land have a major influence on property prices. Inner-city areas, where land is at a premium, means any developments need to be expensive to buy in order to meet costs. In rural areas, getting planning permission to build on land can prove very tricky. And, of course, there is only a finite supply of land. Infrastructure Property prices are also affected by the infrastructure that surrounds it. For example, property that is close to a mainline train station, with good road access and excellent local schools, will be more expensive than a property with none of those things. Investment at a national and local level can have a very big impact on the price of the property in certain areas. Of course, there are hundreds of more factors at play here. Property prices are complex and fluid, changing all the time according to the web of these factors. Things like architectural style, building trends, environmental issues, airport flightpaths – these can all have a bearing on why one property will cost more than another. If you are planning on investing in property you need to try and assess these factors as much as possible to establish what a property is worth. Prices can sometimes be artificially high or propped up by flimsy economic situations, so it is worth trying to take stock of all of the above before making a purchase.

4. If you would like to know more about the factors affecting property prices, then get in touch with a member of our team. We are always happy to talk property at Property Classifieds.