Political And Economic Uncertainty Causes Decline In UK Housing Market
The UK housing market is undoubtedly one of the most important industries in the country today. Just about each and every person in the country has acquired a house, is in the process of acquiring a house or has aspirations of acquiring one and this underscores the importance of the industry. Be that as it may, an analysis of the current scenario of the UK housing market reveals a general decline in the performance of the industry due to declining product prices. The main reason behind the negative industry trend is the fact that the level of uncertainty within the market is quite high. This is due to the impending election that brings to the fray issues of both political and economic uncertainty.
According to The Telegraph, the effect of political uncertainty has seen many potential home buyers suspend their decision to purchase a house until such a time when the political scene will have stabilised. Furthermore, the political uncertainty has also seen many potential home sellers suspend their decision to sell their property based on the assumption that the current political scenario will undermine the value of their property in the market and as such, sellers are also holding out until such a time when the political temperature in the country will have cooled significantly.
Besides the uncertainty on the political scene, there are other additional factors that might affect the market as well with one key factor being a mismatch between the rate of inflation and the rate of wage growth. Currently, the country is experiencing a much higher rate of inflation as compared to the average growth of wages among UK residents. This implies that many people might indeed not be in a position to purchase a house despite the falling prices.
According to International Business Times, the current trend in housing prices is likely to be maintained well into the foreseeable future. This is due to various factors within the UK economy, including low mortgage rates, high unemployment rates and high inflation rates that all serve to support the prevailing low market prices. Furthermore, International Business Times asserts that the declining house prices can also be attributed to insufficient supply of products in the market whereby the number of new homes being availed in the market is much lower as compared to previous periods.
International Business Times makes a comparison between the current performance of the housing industry and the performance of the industry in previous periods. As things stand, the industry has managed to register an annual growth rate of around 4 percent. This is significantly less than the 10 percent that was registered in 2016.
According to an analysis done by the Halifax Price Index, the performance of the industry in the months of March and May of 2017 was significantly lower as compared to the performance recorded during the previous months. This is indeed an indicator that the industry is on a general downward trajectory and this will continue if proper measures are not put in place to reverse the trend.