A review of the housing market over the last 12 to 18 months has shown some surprising data about areas of the UK where there has been stability in terms of house prices, and where bubbles are starting to form.
What makes a housing market stable?
In general terms, sharp increases or drops in house prices cause instability, so if average prices remain static for a period, this indicates a stable housing market. According to Investopedia, there are four key factors in the housing market, demographics, interest rates, the economy and government policies or subsidies.
It takes almost twice as long to sell a property in London than in Scotland according to recent figures. When selling or buying, ensure you use a Conveyancing Solicitor London such as Sam Conveyancing to handle the legal side of the transaction.
If there are any hiccups along the way, these experienced professionals will know how to handle it and ensure the process runs smoothly. In London, house prices have only increased by around half a per cent over the last 12 months, compared to an average increase of 5.7% over the rest of the UK. This has made London the most stable market over the pandemic defined period of the last year.
What has caused the shift?
What we need from our homes has changed. Following the adjustment to working patterns caused by the pandemic, proximity to offices is no longer a high priority for homeowners. Instead, more space for working at home and being able to keep home and work life separate has crept up the list. Without the need to travel to work, homeowners have more disposable income and are trading their compact city homes for larger properties in suburban or rural areas. Spending more time at home has also caused those with an outdoor space to consider themselves incredibly lucky, and those without one, to want one desperately.
The stamp duty holiday and the rush to complete transactions before it comes to an end has also been a fuel to the price inflation fire. A predicted record number of house moves is expected to have taken place in the first half of 2021 than in any other six-month period.
What does this mean for the market’s future?
This flurry of activity over the past year has created a property ‘bubble’ in some areas of the UK. The price rises experienced are not sustainable and these bubbles are likely to burst at some point, resulting in a crash in house prices. With offices expected to reopen in the autumn, is there a chance the pendulum will shift again?