As per a report by Right Move, house prices have been at an all-time high in the past 20 years. The property prices witnessed a 2.3% rise in February. The report further adds that the number of houses rose by 11% and buyers by 16%, leading to a crunch.
These numbers show that there have been many victims of the UK housing market supply crunch, as the demand for UK houses is at its historic high. Thus, many prospective buyers are reaching out to real estate agents to purchase the properties at a double rate, considering the housing market UK crash and crunch.
Around 200,000-240,000 new homes were built in the past few years. Furthermore, more than 10,000 empty homes were made available due to the death of their owners. Amidst all this, affordability has been a significant issue. Due to the lockdown and supply chain problems within the construction sector, there has been inefficiency in delivering houses.
The empty houses have numerous issues, which makes them unsaleable. Some of these issues include a lack of fire safety and security locks. Furthermore, these vacant homes are also the breeding ground for pests. Besides, they can be the centre of attraction for vandalism activities. Thus, many lenders also refrain from offering mortgages against such properties, preventing new homes from getting into the market.
Irrespective of the Covid-19 market, the UK housing market has seen a massive demand with less supply. The stamp duty holidays have contributed significantly to the housing market price in the past 18 months. According to the house price index by e.surv Chartered Surveyors, the average cost of a UK house is approximately £357,750, recording a growth of 7.7%.
With restrictions imposed during the pandemic, many people have stayed in their homes or local surroundings since the 2020s. This eventually led to a rise in the desire for spacious houses. People working from home and unable to go outside want spacious indoors and a private garden outdoors.
These changing habits have led to the "race for space" increase. With the changing demands of people, most of them want to take advantage of tax breaks and move houses with.
The UK housing market price has been at an all-time high since 2006 with an increase in demand but the crunch in providing properties.
There are numerous new buyer registrations, but the type of property in demand is a shortage.
According to Halifax, the UK housing market has seen a massive rise in its prices since 2007. However, it has also recorded a slow start this year. Since the pandemic, the average property price has jumped by £38,709. And within the next year, the average stood at £27,715, recording the highest one-year cash jump in 39 years.
The lack of supplies in the construction sector is a concerning factor. Though the pandemic enters the endemic stage and there are relaxations in restrictions, uncertainty still lurks over the UK market.
As of 2022, the current inflation rate stands at 5.5%, contrary to the Bank of England's warning of 7.25% by April. Therefore, the possibilities are that the average housing prices may rise, but the growth will be slow.
The cooling housing market and the ending of the Stamp duty holiday contributed to the crash in the UK housing market. According to the Director of Lansdown Financial Services, Doug Miller, there has been a significant lack in the supply of houses. Although the government is putting in its best efforts to overcome the crunch and help the developers and buyers, this isn’t enough.
The government needs to try out better measures and incentives to avoid the crunch. Despite the building of new homes, they aren't affordable. Eventually, liquidity increases with the price of property increasing. Every new homebuyer looks for affordable properties which aren't available on a large scale in the UK, leading to a crash.
Material shortage in the construction sector is one major challenge the government faces. Therefore, they cannot meet the housing demands. Besides, the pandemic has had a significant impact on government expenses.
According to the Policy and Campaigns Manager at PropertyMark, "the number of empty houses in England is more than double the UK Government's annual house building budget." Therefore, he says that the government needs to take strong measures to bring these houses to use and maintain a proper balance of supply and demand. The affordability of properties is also a significant consideration for property owners that need to be addressed.
Affordability will be one of the prime concerns for first-time homebuyers. However, as of 2022, approximately 95% of mortgages are available for property buyers. Irrespective of the high inflation, the interest, and the average rate increase is at an all-time low and will continue being so for the time being.
According to Lloyds Banking Group, approximately two-thirds of homebuyers believe that the housing market UK isn't doing enough to provide affordable homes. Therefore, the political and industrial focus will continue to strengthen in this area. As a result, people may be able to get access to affordable houses within their neighbourhood.
This year, significant discussions may also be made to determine how the UK Government can meet its sustainability target. The old and new houses may both impact it, and developers may also work on creating energy-efficient houses. However, the major challenge will be to meet the environment-friendly demands of the homebuyers.
The UK housing market is seeing a massive rise in demand for properties. While there are more buyers but fewer properties, the supply crunch can be a huge problem. Because of the instability in the construction sector and pandemic, it is hard to make any solid prediction yet. The impact of the pandemic and the war will have a significant role in determining the price of the housing market UK.
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