The property market has not yet become another subject which could get outdated over a period of time. It is a booming industry attracting many investors into its frame. The rise and fall of the industry will have a cascading effect on the economy.
It may be surprising to know that only 10 per cent of the dwellings in the UK were owner-occupied at the start of the 20th century, while 89 per cent were privately rented. The Government’s ‘right-to-buy’ policy has triggered the growth rate of owner-occupation in the late 1980s and there has been a dramatic increase in the population owning their dwelling units.
In 1970s, over 400,000 houses were built per year. Though the phase of building the dwelling units dwindled by 1990 to an average of 190,000 houses per year, a conservative estimate reveals that in 2001, 69 per cent of the houses were owner-occupied, with the remainder being let privately or through local authorities and housing associations.
The Emerging Trend
The emerging IT phenomena such as eBay trading, and the growth in buy-to-let property have made the people to earn more even without any high start-up costs or superior education, which leads to a greater change in the property market. As a result the UK consumer economy gained much strength over recent years which are attributable to the price increase in the UK’s property market. So any catastrophe in the property market will certainly have greater impacts on the wider economy.
The trend in the market predicts that the English will have more property.
The surveys conducted by many organisations stand testimony to this view. One such is Wealth management arm of Barclays. It presented a report on property market according to which 8 million UK households will own more than $1 million (510,000 pounds) in property, land, savings and investments by 2016. Furthermore, the report says almost half of all the UK households (49 per cent) will hold aggregate wealth between $500,000 and $1million, with all annual household incomes set to increase on average by 67 per cent over the next ten years. It said there will be more than one million UK households with more than $3 million in assets mostly comprising of house property by 2016.
Unaffordable for First Time Buyers
The property market of the UK shows that it is unaffordable for the first time buyers to purchase property. Studies conducted by several forums and analysts of property market uniformly said that the number of first time buyers in the UK has fallen to its lowest point in the last 26 years.
Another study by Halifax reveals that the near 30-year low reduced the number of first time buyer mortgages by seven per cent to around one third over the course of 2006. Furthermore, the study also found that 90 per cent of towns and cities are now unaffordable for first time buyers, with the average property costing in excess of £150,000. The first time buyers will need to appoint a solicitor or property lawyer to deal with the conveyancing so as to undertake the legal formalities of the property transfer. The method of electronic conveyancing, contemplated in the Land Registration Act 2002 will bring greater transparency to chains of transactions, a major source of difficulty for people buying or selling a home, especially first timers. But the emerging companies are offering many services to the first time buyers to buy new properties in tie-up with the property promoters.
Rate of Interest Vs Affordability
The MPC (Monetary Policy Committee) is expected to raise interest rates and it will dent a heavy blow on the new buyers. As per Government’s statistics the number of houses being built has gone up to more than 181, 000 a year from just under 130,000 in 2001. Over the last 30 years, demand for new homes increased by 30%. Many experts opine that unless the government builds more affordable housing and raises the stamp duty threshold, many households will continue to struggle to access the housing market.
Ups and Downs in House Market
The prices of house have surged very slowly over nine years until 1996.
But it has almost trebled thereafter. The average house price that stood at £774 in 1936-45, has spiralled up to a whopping £111,061 during the decade ending 2005.
Uncertainty about the rates of interest and house prices has introduced an element of caution into the market. Yet the growing need of the people to own their dwelling units proves positive to the economic growth.
About Author
James Walsh is a freelance writer and copy editor. For more information on choosing a Mortgage see http://www.which-mortgage.net
