UK Housing Trajectory
Remarks from TPEX consultancy for decision makers.
Written SH on 2023-10-24.
Housing market valuations in the UK have long been a topic of concern, with many experts continuing to argue that prices are overvalued. This concern is rooted in the persistent imbalance between housing demand and supply, particularly in major cities like London. The result has been soaring property prices that have placed home ownership out of reach for a significant portion of the population. However, an interesting perspective suggests that despite these concerns, the majority of UK residents believe they have benefited from the current housing climate. This is due to the fact that many already own property, and the value of their assets has risen substantially over the years.
Looking ahead, there is an expectation that housing prices will eventually stabilise, potentially bottoming out around March 2024. The reasoning behind this prediction lies in the anticipated support from foreign buyers and institutional investors who are keen on the buy-to-rent market. Government policy, housing benefit, may be introduced which converts distressed home owners into renters. These investors inject capital into the housing sector, providing a continuous stream of demand for rental properties. This support is expected to persist until the conclusion of the next general election, helping to increase housing prices at a risky level. In the long term the failure to build will continue to support elevated prices and the only route to a soft landing requires a significant increase in wages but that needs the allusive productivity increase to arrive.
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