The Future Of The UK Housing Market – 10 Predictions

The Future Of The UK Housing Market – 10 Predictions

The uncertainty and upheaval that the pandemic brought into the lives of people extended to other areas as well, including the real estate market.   Hence, a precise forecast into the future cannot be made at this time.  However, there are some valid predictions which can be taken into account when considering the future of the housing market in the UK.

Pros and Cons:   While some experts feel that the benefits of the Stamp Duty Land tax holiday, and the 95% mortgage scheme led to an all-time high in the property market which is heading towards a crash once facilities are withdrawn, others feel that the boom in real estate is helping the economy recover and purchase of a property will continue to do well with a consequent rise in prices, too.

Affordability:   The closing of the SDLT holiday benefits and the furlough scheme on 30 September 2021, has made the purchase of property less affordable.  Credit ranking and income require to be within the affordable bracket to avail of good mortgage schemes.  This could have an effect on the sale of a property.

Race for Space:  Despite lockdowns being lifted, many people are still working online from home.  The movement to larger homes with additional space and outdoor recreation facilities, particularly in the suburban areas, has not died down.  This will lead to such properties continuing to be sold.

Supply against Demand:  The demand for property has far exceeded the supply.  Consequently, this has led to a rise in price and, as long as the ratio between supply and demand remains as it is, prices will continue to remain high.

Interest rates:  If interest rates remain low, it is less expensive to borrow.  However, low-interest mortgages also attract high property prices.  If interest rates rise, it could have an effect on house prices.

Return to normalcy:  With the successful implementation of the Covid vaccination programmes and lifting of lockdowns, life will hopefully return to near normal.  Once offices, shops, restaurants, pubs, hospitality and entertainment venues reopen completely, property in the city areas will become more popular.  At present, the growth in major cities like London has not been as high as in other areas.  However, one must remember that prices in London are the highest!  As international travel resumes and educational institutions open, the student rental market will resume.  Investment in property, especially in London, from foreign buyers, has always been popular and will remain so.  

Rental market:   Based on monthly payments, it was cheaper to rent rather than buy a property.  It is likely that rentals will increase, especially if affordability to purchase a property is lacking.  Professional investors looking at ROI (return on investment) could look at areas where such rentals would be popular.  With their capacity for growth, it has been predicted that the Midlands and North England will show the highest growth in prices.  Estate agents in Hereford will agree with this.

Risk and return:  Predictions tend to dwell on the return from property investments rather than the risks involved.  While house prices have remained high, despite the pandemic, the property market is still exposable to external shocks to the economy.  In the event of such a situation, the demand could reduce, and prices could drop.

AI and Technology:  The available and still ongoing research on technology and AI (Artificial Intelligence), has impacted the property market and made facilities so much quicker and easier.  Lead generation, home searches, property valuations, streamlining procedures, desktop underwriting are some ways in which a competitive edge on pricing can be gained by the use of such technology.

Moving house:  With the soar in property prices, the cost of moving homes also increased.  With savings accumulated from the SDLT holiday and furlough scheme, people were able to pay high fees for moving home.  Now that these benefits are no longer available, some people may think twice about moving and may wait.  This could also have an effect on house sales and prices.

Conclusion:  Even though the housing price boom may have been over-predicted, it is not likely that there will be a sudden collapse.  With the revival of the economy and reopening of businesses and the industrial sector, even though there may be slight fluctuations in the housing market, the “bricks and mortar” has remained strong and has withstood the test of time.  It will continue to do so

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