With reports of double digit price increases from many countries, including the UK, its time to reflect on the reasons for this. With the pandemic easing, the whole seemingly wants to have their own little bit of real estate. One of the main reasons the market is going up, is because there are more buyers than sellers. There is a severe shortage of available property for people to buy.
Not many people are putting their property on the market, and you have more people wanting to come into the market, or move than the market can satisfy. Also there has been a big move away from more urban locations into locations that you can still commute from and have more space.
It only takes a little bit of imbalance in the property market to produce strong price increases, as the property market is what we call in-elastic, or cannot respond quickly to increases in demand.
However, I have heard that there is more demand for people who now want to buy in London. We will see what happens in the future but it looks like for at least another 9 to 12 months the property market will still be too hot to handle.
This is very unfortunate for all those people who wants to buy, but can’t afford it. This will have a strong tendency to push people into political parties that can deliver on their housing promises, or more left-wing parties.
It does not do anyone good in the long run when prices rise sharply. There are long-term consequences for instabilities in a country which has such rises. We already have wealth inequality in the country, and all those people sitting in rented accommodation are not feeling very happy at the moment. So let’s spare a thought for them, and hope the market cools down very soon.