Why Do House Prices Rise?

 

When we feel as though we’ve outgrown our current home, it can be disheartening to find out that house prices have risen since we last checked. Unfortunately, in recent times, the news that house prices have risen isn’t just likely, but inevitable.

The housing market and house prices are influenced by numerous factors, from the state of the economy and interest rates to income and the changing size of the population. On top of these demand-related factors, however, prices are also affected by the available supply. When demand increases and the available supply of houses can’t keep pace, the price of property rises.

In this article, the Metro Removals teams are going to take a look at these factors in greater detail, to see just why house prices rise.

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Population growth

One of the factors which determines the price of housing is a fluctuating population. Here in the UK, the population has grown by nearly 15 million since the 1960s. This shows no sign of stopping, too, as we’re projected to have a population of over 70 million by 2030.

Obviously, the problem with a larger population is that demand will inevitably increase which, as stated earlier, is one of the key factors in rising house prices.

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Concentration of demand

It’s not just an increase in demand which is causing house prices to increase, it’s also because of where that demand is concentrated. The concentration for rent and for ownership in London, the south east and a few other locations of fast job growth means prices are boosted further. That is, there is increased competition in an already competitive market.

 

 

We’re not building houses quickly enough!

If housing prices are to be stable, building needs to be running at a parallel with population growth which, unfortunately, it isn’t. There are a number of reasons why this could be happening:

  • Lack of available land: Considering the sheer size of our population, the United Kingdom is very small, we’re simply struggling to find room for homes without creating overcrowded areas.
  • Regulations: In the UK, there are regulations which prohibit developers from building on greenbelt land (a designated zone of largely undeveloped, wild or agricultural land surrounding urban areas). While this is hotly debated, it’s unlikely that this will change anytime soon.
  • Lack of investment: Thanks to the crash at the end of the last decade and the cautious recovery that followed, house builders are concerned about such an event happening again and, as such, don’t want to overcommit.
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As a family run business with over 30 years experience in the removals industry, you can rest assured your belongings are in the best possible hands. Moving house needn’t be such a stressful process, and we can aid you from start to finish; from taking care of packing your home safely to transporting and delivering the contents of your home to your new address. For more information, get in touch with our friendly team today.