How healthy is the UK housing market?

Despite some commentators forecasting gloom, house sales in the UK are still slowly rising

 A few moments looking at housing market news items could easily give the impression that the UK housing market is depressed. Certainly, the increase in value of residential property over the past year has been seen to slow. But is this something which should cause us real concern when looking at the bigger picture?

The total number of UK residential property sales in June 2017 (non seasonally adjusted) was up 13.2% on the previous month. This can of course be attributed largely to the tendancy of UK property owners to move during the summer months, so some increase is to be expected.
However, the number of transactions is up 8.4% on the same month in 2016.

The influence of the referendum on 2016 data cannot be discounted, but following the peak just prior to the government’s tax assault on buy to let landlords in April 2016, a slump in sales figures was no surprise due to the previous rush to complete on transactions before the April deadline.

Long term, house transaction completions have been showing a slow but steady increase in number year on year since the financial crisis in 2009. With buy to let investors now being priced away from the market by the tax regime and the figures still showing modest increases, this might mean that actually, more private individuals and families are managing to buy their own homes. Surely, ignoring the economics, this might be viewed good news for the people of the UK?

One could question whether continued ‘healthy’ growth in house prises, despite being used by some as a measuring stick of the economy; is a good thing for the householder. All the time the housing market exceeds wages inflation, houses become less affordable to those who wish to buy their own home. Furthermore, who benefits from increases in house prices? Only those with investment properties in addition to their own will ever see personal gain from the increase in value. For the rest of us, it just means a bigger and more expensive leap to our next property as we try to progress up the housing ladder. Wouldn’t we be happier if house prices simply followed general inflation, so that we can see a way to work hard, save, and eventually better what we have, instead of watching our goals soar further and further out of reach whilst economists chirp happily about what a success that is?

This is the reason I see house prices remaining relatively stagnant as a potentially positive thing. It doesn’t stop the market from working.
So despite so many commentators still telling us to panic because of a housing price slump, Brexit, uncertainty, interest rate forecasts and a half-empty glass, it seems we are still quietly progressing reasonably well, seeing the future not in how much we might win or lose from market speculation, but in our personal aspiration to watch it all happen from the comfort of our own homes.
The phrase has been used too often in recent years, but perhaps it is the best advice – Keep calm and carry on.

Statistical information in this article sourced from the Office of National Statistics and used under Open Government Licence V3.0
Opinions expressed are that of the writer and do not represent the views of Bickers Insurance Services Limited.

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