UK house prices are set to continue rising faster than
incomes over 2016.
Why? Put simply, a rebound in demand from would-be
purchasers butting up against a shortage of properties.
The Royal Institution of Chartered Surveyors predicts
that average prices will increase 6% during 2016.
With interest rates still at crisis-era lows and
inflation bumping around zero, most British households have seen a notable
improvement in their disposable income over the last year. This has resulted in
the UK becoming increasingly confident about making consumer purchases as the
economic recovery has consolidated but there has been a ‘dramatic fall’ in the
inventory of property on estate agent books……not enough new instructions to
replace the stock sold.
The words housing and crisis have rarely appeared so
inseparable. While housing has leapt up the Government’s agenda, the time lag
involved in development mean that prices and rents are very likely to rise.
And remember, property is a big deal in the UK……80% of
total personal wealth is tied up in property.
Dare I suggest that an increase in property prices will
increase consumer confidence and we will see an increase in consumer spending
in the UK in 2016!
The Government aren’t daft……they know that to increase
spending they simply have to limit supply of property to keep prices inflated.
Simple economic strategy really when you think about
it……and we fall for it every time.
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