The market for new houses experiences a boom immediately following Easter. There is some hesitancy from realtors this year as house prices are no longer rising. British citizens look at housing as a great investment and there is normally a great desire to own a home. This year the enthusiasm has waned and one possibility is anxiety concerning Brexit. Another possibility is rising inflation, even though borrowing has never been cheaper in Britain. The most likely explanation is that homes are simply too expensive. This leaves only three options, lower prices of houses, raise income, or allow the situation to remain at stasis. The zero growth housing market is considered a good thing economically as this phase normally follows a period of unsustainable increases in housing costs which will eventually lead to a crash if it continues unchecked.
Key Takeaways:
- Housing prices have plateaued and interest rates are good, yet costs are still above the reach of first-time home buyers.
- A large rented sector can be beneficial to an economy by increasing labor mobility and encouraging more business start-ups.
- An economy heavily dependent on the housing market will fluctuate as property prices rise and fall.
“As things stand, 2017 looks set to be the weakest year for housing transactions since 2013.”