Brittain's property market on the brink of a standstill?
Stagnant and Overpriced: The Current State of Britain's Housing Market
The housing market in Britain has been in a prolonged state of stagnation since the global financial crisis of 2008, with inflation-adjusted house prices only returning to 2007 levels, a time when they were already considered expensive relative to incomes. This contrasts with the substantial price rises seen before the crisis, and since then, real house price increases have been slower and more uneven.
In London, a city known for its high property values, inflation-adjusted house prices have been stagnant since 2016. There is a growing divide between terraced houses and flats, with flats being more affected by the stagnation. The housing market in London also has a shrinking yet arguably undervalued stock market.
The mood in Britain's housing market is bleak due to the stagnation and overpricing of houses. Two decades ago, Britain was in the midst of a property mania, with flipping houses being a popular path to rapid riches. Financial-advice columns were filled with those who wanted to expand their buy-to-let portfolio or had already borrowed too much and were panicking. Today, the mood towards property in Britain is different.
Inflation is a significant factor in the assessment of house prices. The realization that expensive housing is a curse that hinders the economy, not a source of good fortune, has become more apparent in Britain today. Investing in property is less appealing due to tax changes and new laws in the country.
The Land Registry data, while less timely, provides the most comprehensive view of long-term trends in house prices. Exclusive early access to news, opinion, and analysis from a team of financial experts can be enjoyed with a website subscription. A crash in property prices is less probable than a long stagnation in Britain, unless interest rates soar or supply vastly increases.
Many people buy houses because they are tired of renting sub-standard properties or want certainty of housing costs for later in life. However, the current state of the housing market in Britain's financial center, particularly London, presents challenges for both buyers and sellers. It is essential to stay informed about the latest trends and developments in the housing market to make informed decisions.
[1] Global Financial Crisis: Lessons Learned and Implications for the Future [2] The Impact of the Global Financial Crisis on Housing Markets Worldwide [3] The Long-Term Effects of the Global Financial Crisis on Housing Markets [4] Understanding the Housing Market Recovery Post-Global Financial Crisis
(1) As the housing market in Britain remains stagnant and property values remain high, some investors are less interested in property investing due to changes in taxation and new laws, questioning the future possibilities of substantial returns. (2) Finance experts suggest staying informed about long-term trends in house prices, such as those provided by Land Registry data, to make well-informed decisions when it comes to property transactions, especially in London, where the market presents unique challenges for both buyers and sellers.
