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6 Reasons For The Slow Housing Market

Updated: Sep 18, 2019

The housing market is currently not moving as fast as many estate agents would like. But why? Below are six reasons why the housing market falls or rises and what we can expect for the next year.




1) Economic growth. Demand for housing is always dependent on what we all earn. When wages go up, people can spend more on a house. Because the demand for property increases so does the price. By comparison, when a recession hits, income goes down, and people can't afford the payments on a mortgage. This can lead to homes being repossessed and house prices dropping.

2) Unemployment. Obviously related to economic growth, but when umeployment rises, fewer people can get a mortgage or buy a property. Also just the fear of unemployment is enough to keep people out of the market. Less buyers means lower priced housing due to lack of demand.

3) Interest rates. Interest rates make mortgages more or less affordable. High interest rates means expensive mortgages and lower demand for houses. These high interest rates makes the rental market more achievable and therefore more attractive. Lower interest rates means a more affordable mortgage repayment and therefore people become ready to jump into the market. More demand.

4) Consumer confidence. Very relevant today with the scary political "B" word. Confidence is vital when people weigh up the risks of taking out a mortgage. Right now, put simply, the general consumer has no confidence in the country. No idea whether rates will rise or fall. And no confidence in taking out what is essentially a bank load for hundreds of thousands of pounds. Therefore the demand drops, therefore the supply drops and consumers wait to decide to sell or buy.

5) Mortgage availability. From 1996-2006, banks loved to lend mortgages. From 3 to 5 times the household income and 100% mortgages available, the demand for housing became very high. However, 2007 brought the credit crunch, and banks struggled to raise funds for lending. This caused a reduction of availability of mortgages which lowered demand.

6) Supply. If there are no houses available, then house prices rise. Vendors begin to demand higher prices and agents begin to overvalue because of lack of instructions.


That's it. We are currently seeing a lack of property on the market, along with a lack of buyers. However, despite these lows, the market is still moving. The question is, what is around the corner? A 180 degree turn to the positive? Or a further dip into a stagnant market. At the end of the day, the combination of consumers, economical and political movement will decide the fate.

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