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Lack Of Supply Impacting UK House Prices

January is often a slow and miserable month for many people. The after-effects of the festive period leaves many of us beginning the New Year looking to improve our health and our finances. With the weather being mainly grim as well, it is easy to see why most people look to get through the opening month of the year and then start afresh in February. However, according to figures provided by Nationwide, the UK property market was particularly perky in January of 2018, with house prices rising.

Most of the predictions regarding house prices in 2018 suggested that house prices would fall or at least slow down in their growth. This means that many people, including economists at Nationwide themselves, were surprised at some of the figures for January 2018, which included:

  •    The fastest annual pace rise in 10 months
  •    An average property price of £211,756
  •    An increase in property values of 0.6% compared to December 2018
  •    An annual growth rate of 3.2%, up from 2.6% the previous month

While all these figures look promising, analysts are advising that the overall outlook for the rest of 2018 is one of slow growth rates and some areas experiencing a fall in property prices. The focus on falling house prices looks set to represent west and central London, areas which have witnessed extensive growth in the past decade.

Affordable housing is required in London and across the UK

Even though factors like affordability and Brexit are impacting on the property market, the rise in property prices has been out down to one issue which has been a constant factor in the UK property market of late. There is a lack of housing in the UK and perhaps more pertinently, there is a lack of affordable housing in the United Kingdom.

When there is limited supply, price will rise to meet demand, and this has been the underlying factor in the property market.  Even though many observers still believe that this growth is unsustainable, there are some factors that could see this level maintained. Many buyers can access appealing mortgage rates, there is a high level of employment, the likelihood that consumer price inflation will be at a moderate level and the afore mentioned limited supply of housing all provide reasons as to why the slump in house prices that many predict may not unfold.

It is not always helpful to look at the UK property market as a single entity. It is not even beneficial to consider the London property market as a single unit, the breadth and depth of variety available across the capital means that while some areas will not be suitable for many buyers, there are still plenty of areas that are welcoming to first-time and second-step buyers.

There are so many factors influencing the London property market, it can be difficult to stay up to date. If you would like assistance in understanding the London property market and knowing the latest news, be sure to contact Unico Property Group and we will be happy to help.



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