Trends Of Property Prices Are Negatively Tracked By Economists

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Trends in property prices are passionately tracked by economists because it is often a person’s biggest purchase and can also affect the rest of the economy. Property price trends are affected by many factors, however they are like all other normal goods, price and demand are inversely related, if the house prices are high fewer people will be willing and able to buy a house. Property prices tend to increase as time goes by, this is positive equity as the owners are better off. However, as seen in the 2008 recession many people were in negative equity because the outstanding debt is more than the house’s retail value. If consumer confidence is absent it discourages expenditure, because if they cannot pay, the house could be…show more content…
Since there are more people in the UK, and they are living longer, the number of second-hand properties being sold is less, causing the prices of ones on the market to increase. Dwellings have a high income elasticity of demand, so if the level of income increases demand for property will also increase. Also, when people’s income increases they are more likely to buy properties than rent, also increasing average prices. There has been an overall increase in house prices because 20 years ago average income was £19,774, peaking to 24,683 in 2008, then decreasing to £22,524 in 2014 (source: rate inflation). Social trends can also affect house prices, recently a trend has emerged for later marriages, the mean age for marriage has increased by 8 years for men and women since 1972 (source: ONS). This has led to an increase in demand for smaller dwellings such as apartments, causing the prices of these forms of residence to rise. The Bank of England can change the base rate of interest; this will be passed on by banks to the general public, increasing the amount paid on variable rate mortgages. A higher rate will rule some people out from being able to afford the house they want, decreasing demand for houses and lowering the value of ones on the market. Recently, due to the economic crash the interest rate has
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