Buying a house can be an exciting and fun process, but timing it right is key. The housing market does always fluctuate, but there are times when it is steadier than others.
Many factors can influence the level of demand. But what does this mean for the housing market?
Economic factors
🏆
The 2024 Creative Retail Awards are open for entries.
The Creative Retail Awards are much more than a mere accolade; they represent the pinnacle of achievement in the retail industry. Garnering a nomination or winning one of these awards is a testament to innovation, excellence, and leadership.
www.creativeretailawards.com
Interest rates typically have a significant influence on the property market. For example, low interest rates tend to increase demand for properties as it will be more affordable to get a mortgage. Higher interest rates have the opposite effect, putting potential buyers off until they lower.
Employment rates can also impact the property market. If there are more people unemployed, they are not in a financial position to buy a house. Similarly, if more people are working then you may find that the demand increases.
Both of these factors can fluctuate monthly, so finding the perfect time to buy or sell a house can be challenging. This may put people off for longer than a few months until the market stabilises.
Housing affordability
The link between wages and the affordability of housing has always been intrinsically linked. Affordability is measured on averages. If the average house price is no more than three times the average salary, it is considered affordable.
In England and Wales for 2022, the average salary for a full-time worker was £33,400 which would make an affordable house around £100,000. However, the average house price was actually £270,000. This figure does encapsulate the entirety of England and Wales, meaning that some homes in Londo, for example, are significantly more with the average wage similar to the national average.
If you are a homeowner and are struggling with finances, then you may want to look into releasing equity from your home. Use an equity release calculator to see how much you could release whilst still having ownership of your home.
Demographic shifts
The make-up of the population in the UK has changed over the decades, with more people living longer and the population growing faster than houses are being built.
People living longer means that they are staying in their homes longer. In the years past, people moved into smaller homes or nursing homes earlier, freeing up their family homes for new owners. As people are staying in them for longer, there are fewer properties available on the market at any one time which means there is more competition for the few that are available.
By 2030, the UK population is expected to sit somewhere around 70 million people. When you combine this with the ageing population, there are more people than there are houses. This is leading to more competition for both renting and owning a property.
Overall, it is looking likely that house prices will fall by up to 10% between 2023 and 2025 which might make buyers a bit more interested. However, interest rates are looking to be stable at a higher rate for most of 2024 before tailing off towards the end of the year and into 2025.
