In the UK, demand for property is extremely high. Over the past decade, the size of the population has grown rapidly, while the rate at which new homes are being built has fallen sharply.
During the 90s, and early 2000s, around 200,000 homes were being built, each year, in the UK. In 2008, the financial crisis struck, and the number of new builds fell to between just 118,000 and 160,000.
In 2006, the population of the UK was 60.62 million. By 2015, it had reached 65.1 million.
The gap between the number of people needing a home in the UK, and the rate at which new homes are being built has widened with each passing year. As a result, demand for UK property continues to outstrip availability.
This lack of affordable property has done some interesting things to the UK property market.
Demand for rental property soars
Since the recession, wages have been largely stagnant, while property prices have risen steeply. In many areas, the rises were in double figures. As a result, every month, more people are realising that there is no way that they can afford to buy their own home.
They have no choice but to rent. As a result, demand for rental property has soared.
More people investing in property
A natural secondary result of this trend to rent has been an increase in people investing in UK property. In many cases, these new landlords are UK residents who see buying a second house as a way to secure additional income, and provide themselves with a cash fund to be used in retirement.
However, in some areas, such as London, the majority of buyers are based abroad. These investors range from private individuals buying just one property to investment groups buying up hundreds of flats.
Most of these buyers are opting to buy off plan. As a result, in some parts of the UK, overseas investors are buying almost all of the new homes that come to market. Sometimes they are choosing to keep these properties empty rather than go through the hassle of being remote landlords. They are relying on the fact that property prices will continue to rise to make money.
Demand for northern property is growing
The fact that property prices have reached such high levels in the south is now driving up prices in the north of the country. Recently, York Estate Agents, and many of the UK’s Northern cities, have seen demand for properties in their area grow at an unprecedented pace. Cities like Hull are now attracting international investors looking for a bargain.
What does the future hold?
For the UK property market, it is an interesting time. Prices have now reached the point where most private buyers cannot afford to buy, which opens the way for investors to buy more of what is available.
However, some financial advisors believe that the fact the UK is due to leave the European Union will make international investors think twice about buying more property in the country. If that happens, there is a good chance that prices will begin to level out, possibly even start to fall in some parts of the country.
You can read more about the UK housing market and how it works on this page .