How the financial crash made our cities unaffordable
Usually when there is a financial crisis it tends to see asset prices collapsing, making housing more affordable. But its been different this-time because authorities countered the 2008 crisis with low interest rates and quantitive easing.
UK Stock and Housing Markets have risen at roughly the same levels in the past 10 years but with weak wage growth, the result is that housing in the UK and other countries have become less affordable. Data shows that houses in London, the East and South East are the most expensive with London said to be overvalued by 37% against incomes. By contrast houses within other UK areas are said to be undervalued and more in line with prices in other parts of Europe e.g Italy, Greece and France. It is still difficult to predict the buyer/seller confidence and this influences much of the markets movements up and down, the smallest thing can spook people even a tiny rise in interest rates, which have not moved upwards for over 10 years.
In the past, rates have risen and fallen within a year, so people were used to the change, however a small change in rates today, much talk of price crashes in the media, Brexit uncertainty and a bit of general doom and gloom in the air, could well put people off making property decisions till the Summer, add to this, the general market has changed so much with 50 per cent of homeowners now owning their property outright, with no mortgage, and of those with a mortgage, most are on fixed rates and insulated from rate rises for a while and first time buyers are being properly assessed for mortgage affordability, so are not able to borrow large amounts of money. For buyers able to qualify for a mortgage or cash rich buyers this may be an excellent opportunity to buy in London and or the South East as there are no certainties of the market crashing and prices could start to increase again after Brexit.
For more information on How the Financial Crash Made our Cities Unaffordable See this article in the Financial Times