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Housing market related to unemployment

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By : Elzbieta Falat    99 or more times read
The housing market is constantly slowing down, dropping the house price to the average of £164,708. People still facing problems as large deposits are required for house mortgages, which keeps them away from the property market and makes them wait and see what the New Year’s trends will bring. Demand from buyers is therefore constantly dropping down, affecting the market, what we can see when comparing current house prices to January’s statistics. The prices now are 2.8 per cent lower than at the beginning of this year and might drop even more during next year.

The cause of such situation is very composed, it’s a mixture of:

  • Mortgage difficulties
  • Unemployment index which rose to 2.5m
  • Very little or even lack of wage growth
  • Lack of confidence to future declines
  • High number of houses coming to the market
  • “Wait and see” attitude
  • Reduced demand.

However some statistics show that house owners start to be careful with putting their properties to the market which might reduce the number of properties remaining on surveyors’ books and eventually cut off the pressure on prices. It would be positive reverse as in November the average number of stock in surveyors’ books rose from 67.2 to 69.5 while sales index dropped down making a huge gap between stock and sales.

Optimistic forecast shows that interest rates might remain low, encouraging more people to get a mortgage and buy a house. As a result house prices would stay relatively stable rather than falling further. The current market has no determined pattern, despite seemingly falling prices there were in fact months when prices were varied. Although current market seems to not be in perfect condition, becoming a landlord is a very good way to run a business because mortgage difficulties force many of the potential house buyers to stay in rented property so tenant demand remains strong. Landlords with relevant landlord insurance might therefore find today’s market beneficial.

Just to sum up, until mortgage affordability won’t improve, job market won’t get more stable and people’s attitude won’t change from “wait and see” into “take an action”, housing market will stay slow.
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