The Property Market In The UK


Image showing some houses in the property market in the UK

Investing In The Property Market In The UK


Learning about the property market in the UK can be the key to getting a good deal when you want to buy a house or commercial premises. The average price of a house in the UK in December 2019 was around £300,000. Not surprisingly, London was the most expensive area where properties were around double the average price asked in other parts of the country.

In January 2020, ten out of twenty of the most expensive streets to buy property were located in London. This makes what used to be a cost effective purchase, such as buying a flat in London, very expensive for those on a normal wage. University cities like Oxford and Cambridge were also in the most expensive bracket with the average price of a property in these cities coming in at around £400,000.

Cities like Liverpool and Glasgow had the cheapest property prices and in these areas the average property price was around £123,000. Outside of the cities in places like Peterlee and Cumnock the average price of a property was around £70,000.

The main reason for high prices in UK cities is down to supply and demand. In spite of a few downturns in the market, the overall demand for housing is still on the rise and this has created a continual increase in prices. Around 37% of people living in the UK are afraid that they will never be able to afford a property in their own home town.

Is The Property Market In The UK Rising?


The forecast for house prices in the UK is currently in a state of uncertainty due to the twin factors of Brexit and the Coronavirus. If you are considering buying a property it is important to keep up with the ever changing developments of the property market in the UK. Equally important is to be aware of local trends which may be different to the rest of the country.

In 2020, overall property prices in the UK have risen as buyers have taken advantage of the stamp duty holiday that lasts until 31 March 2021. There has been a surge in demand for properties outside of the cities but values in London continue to stay ahead of the rest of the UK. When the stamp duty holiday expires, experts forecast that there may be a slump in sales which could cause a lowering of property values.

What Are The Effects Of Rising House Prices?

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High property prices cause problems and in the UK the ratio of prices to salaries is the highest in the Western world. This has led to a division in society between property owners and those who rent. Renters face ever increasing housing costs and in some cities this has forced people to move away from housing hotspots and has caused a decline in available labour.

The shortage in supply of affordable properties has forced many people to move away from their home towns and has meant that some people have taken on higher mortgages. If interest rates were to suddenly increase there could well be many new home owners who become unable to contend with higher payments. The continual rise in property prices does not bode well for a balanced economy nor does it encourage a strong and stable housing market.

UK Property Market FAQ

How Does The UK Property Market Affect The Economy?

The property market in the UK is linked closely to the economy. Consumer spending increases when confidence is high and decreases when there is uncertainty. If property prices go down, consumers are more likely to rein in their spending due to worries about the value of their property. Equally, spending increases when house prices go up.

Is The Housing Market In The UK Equal?

Currently the property market is not equal. In spite of the recession caused by Coronavirus house prices continue to rise but availability of 95% mortgages is drying up. Potential buyers are being asked for large deposits which means first time buyers are struggling to enter into the market.

What Factors Have An Effect On The Property Market In The UK?

The property market in the UK is influenced by many factors. Chief amongst these factors is the supply of housing and the demand of buyers. Economic growth, interest rates and the availability of mortgages all contribute to the state of the market. In addition, unemployment is a major issue as this affects consumer confidence.


How Changes To Stamp Duty Affect The Property Market


In July 2020 the Chancellor made changes to the stamp duty threshold and this has had an effect on the property market in the UK. The changes were designed to encourage upward movement in the property market and could help make a saving for buyers of up to £15,000 on a purchase.

The new threshold means that buyers do not pay any duty on properties valued at £500,000 or less. This new threshold does not apply to purchases of second properties but were specifically set up to help first time buyers to get onto the property ladder.

As a result of the tax changes and the Help-To-Buy scheme the property market in the UK saw demand increase especially in the area of new builds. Enquiries at new build sites went up by 51% on the day that the new scheme was announced. The stamp duty holiday will run until 31 March 2021.

Investors buying properties to increase their portfolio have also benefited from the scheme as just the 3% surcharge is applied to the purchase of second or third properties as long as the purchase price is below £500,000. The stamp duty changes have been effective in bringing confidence back to the UK property market.

How Would A Recession Affect The Property Market In The UK?

If the country falls into a recession the effects are widespread and could possibly trigger a crash in the property market in the UK. The last UK recession occurred in 2008 after the world wide financial crisis and as a result property prices fell dramatically.

A recession happens when the Gross Domestic Product (GDP) falls for two consecutive quarters. This happened in the first two quarters of 2020 and officially the UK is in a recession. However, these extraordinary times during the world wide pandemic mean that the UK is not the only country suffering from a lack of growth. This recession is very different from previous ones as governments all around the world have shut down large parts of the economy.

When a recession hits there is unemployment, failing businesses, house repossessions and a lowering of wages. All these factors can adversely affect the property market as people are unable to move or to invest in a larger property. Fluctuations in currency can also affect the property market.

Falling property sales reduces tax revenues and this in turn makes house prices fall. In spite of the recession the property market in the UK has remained resolutely buoyant but whether current events will have long term effects on the housing market is yet to be seen.

Is The UK A Good Place To Invest In Property?


The UK has always been viewed as a safe haven for property investors. The potential of good returns from rentals or renovating and selling on has not diminished in 2020. Ultimately, the amount of return you can expect will depend upon where you invest your money. Away from the capital there are good signs that investing in property will give good yields.

Experts have indicated that Liverpool and Manchester are two of the best bets to invest in property. Average property prices are around £182,000 and £242,000 respectively. Annual house price growth over 5 years are currently 8.45% for Liverpool and 15.76% for Manchester.

No one can tell what will happen in the future but it is clear that the UK still represents good value for property investors. A separate analysis is available for the property market in Scotland and the London property market.

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