We hear so often about the housing market and the economy, and how one can impact on the other. Most of the time, the prices of items such as food, cars, taxation and more remain relatively stable in the course of an average year, but when it comes to bricks and mortar, fluctuations can and do occur seemingly all the time. No wonder even the most gifted experts find it difficult to predict what will happen next.
One of the reasons for the changes in house prices lies in the confidence of those who are buying. When the economy is performing well, more people think about making a long-term commitment to a more expensive mortgage. During economic good times, wages tend to be higher, and many people feel more secure in their jobs. Put simply, the stronger the economy, the better we feel about our futures.
Most of us understandably associate a strong economy with low inflation and therefore a low interest rate. It comes as no surprise to hear that this can encourage more people to borrow, confident in the knowledge that their mortgage payments are likely to be affordable for at least the time being. Even if the economy changes a little in the coming months, that affordability is probably going to remain in place.
Another factor is of course the age-old interaction between supply and demand. If there are more people looking to buy, the supply of available properties inevitably decreases. As a result, the price of flats and houses on the market will increase over a period of time. The longer this situation remains in place, the faster the prices are likely to rise.
And when the economy is under-performing and there’s very little confidence in its financial stability, the situation goes into reverse. Fewer people look to move in uncertain times, so vendors will often end up reducing their asking prices in a bid to appeal to a diminishing number of potential buyers. And while this scenario plays out with a number of products and services, it’s the housing market that we tend to take more notice of.
There are other factors at play here as well. As in many other countries, the UK’s population is increasing, and the construction industry has been struggling for some time to cope with the need to provide more housing. Buyers will end up spending more, in part because they are in competition with so many other people looking to purchase a property in which to live.
House prices in Scotland and elsewhere have been on the rise for some time now, so if you’re looking to sell your house at the moment you’ve picked a good time to do so. Here at MML Law, we know the housing market inside out, and we’d be happy to act on your behalf. Our aim, as always, is the same as yours: to get the best possible price for your property. To find out more, call the team today on 01382 206000. We hope to hear from you soon.