As UK house prices continue to soar, it seems that any hope for the property market to calm is a long way off.
With each month that passes, new records are being broken, which fuels mass speculation that a crash in the property market is inevitable.
This post is written by Mark King Properties, a professional property cash buying service in South Wales UK.
If you are looking to sell a house fast, contact Mark King Properties today.
The increase in property demand is down to incentives such as stamp duty holidays, lower mortgage interest rates and 95% mortgages, making the prospect of purchasing a property a more achievable reality.
The ongoing pandemic has also contributed to the spike in property demand.
Lockdown created opportunities for people to save more of their disposable income as they were spending less on dining out, gym memberships or beauty and healthcare treatments. These regular savings meant people could accumulate deposits much quicker, especially at 5% for first-time buyers.
Once lockdown eased in the UK, many seemed eager to get on with their lives and make up for the lost time. The prospect of new beginnings combined with the aforementioned financial incentives led to an influx of new buyers entering into the property market which has caused it to become oversaturated, with more people looking to buy than to sell.
Homeowners and buy-to-let landlords viewed the rise in demand as an opportunity to capitalise and continued to escalate property prices, currently, house prices are up by a staggering 10.2%.
Government financial support schemes have also had their part to play in the hysteria by giving investors the means to extend their portfolios of buy-to-let properties.
When the inventory of properties becomes sparse, it creates fierce competition amongst buyers, which can lead to unrealistic offers and “gazumping” this is a term used when someone makes a higher offer for a property than someone whose offer has already been accepted by the seller.
Lenders do not offer mortgages on over-priced properties resulting in many houses having to be re-listed for sale. When a property has been down-valued by a surveyor, unless the buyer has the funds to make up the difference, it can end up going back onto the property market.
As property prices reach unsustainable levels, they gradually start to decline. However, properties in major cities and sought after residential areas will always be desirable whereas, properties in more remote or rural areas may be affected more and take a little longer to recover.
What Can Cause The Property Market To Crash?
- House prices reach unsustainable levels
- Money supply shortage
- Spike in interest rates
Do We Think The Property Market Will Crash?
Although no outcome is ever impossible, the above factors are not a current concern, and it is unlikely that the property market will crash any time soon. We do, however, expect the property market to slow down considerably over the next 6-12 months, but we are confident in our belief that a crash in the property market is not on the horizon.