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Why house rising prices may be killing the housing market

29th February 2016 Print
House

The continued proliferation of house prices has created an imbalance and slowly stagnating marketplace, which is slowly choking the life out of the sector in the UK. The chasm between supply and demand is exacerbating this issue, as a lack of viable housing is enabling vendors to inflate prices further and even trigger bidding wars on their homes.

While a slight decline in growth during the second half of 2015 (particularly in prime, saturated London markets) and more moderate forecasts for the New Year have eased the issues, it will take a while for the government’s new-build initiatives to come into play. As a result, continually climbing growth is imparting further damage on the long-term appeal of the market, with a number of regions now reporting lower rates of completed transactions as supply declines further.

This may be being caused by greed among home-owners, who are increasingly keen to sit on their real estate investment and wait until the market peaks before selling. Cambridgeshire saw a staggering 47% decline in the number of house sales between April and September last year, for example, making it impossible for aspiring first-time buyers to take their first steps in the marketplace. In the East of England as whole the rate of completed transactions fell by 30%, creating a realistic scenario where the market could actually grind to a halt.

This is clearly concerning news, especially if the trend continues into 2016 and beyond. Of even more concern is the potential for another global recession in the next 12 months, which could trigger a property market collapse and leave millions with negative equity and mortgages that they cannot hope to repay. Not only would this trigger a huge demand for the services of the quick house sale market and firms such as www.propertyrescue.co.uk, but it would sound the death knell for wider economic growth in the UK.

For the market to retain its sense of equilibrium, it must first look to adhere to manageable and scalable growth between the 5% and 7% mark that has been initially forecast for 2016. It must also hope that the global recession is averted for the foreseeable future at least, as this will offer the market an opportunity to breathe and recover it innate balance. The British economy must also stay strong and maintain its robust performance, as this will reinforce growth and maintain the existing levels of positive sentiment.

This will also allow time for the government’s numerous new build projects throughout the UK to bear fruit, as they press ahead to build on recently acquired land and create a plethora of affordable houses for the masses.

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