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Demand Rises In Housing

House prices in the UK have seen an upward turn during the month of February, increasing at a rate of just under half a percent on average, carrying on from price rises in the two preceding months.

The reasons behind the price rises is a simple case of supply and demand in action – there simply isn’t currently enough houses on the market to keep up with the number of buyers looking to make a purchase. February has seen something of a surge in first-time buyers entering into the market, which is what has generated the reduction in supply, as unlike those already on the property ladder, they are not putting a home on the market for another buyer to snap up.

Higher than expected demand in February followed a general improvement in the number of sales towards the end of last year, which is why house prices have seen steady, if measured, increases of late.

London saw the biggest increases, both in terms of demand and in actual sale prices. Demand grew with a thirty-five percent increase in first time buyers entering into the market, which was a major factor in the house prices rising by just shy of one percent.

Things are looking good for the UK property market, while big increases are not expected, there are definite signs that the market will remain buoyant after a slump during the middle of last year. It seems as though the general economic situation is making buyers feel comfortable about entering into the market, and perhaps the cut in the repo rate by the Bank of England in the second half of last year is still helping to stimulated house purchase.

A boom in house prices isn’t likely, which is good news for those yet to get a foothold on the property ladder. For prices to rise significantly, there would need to be a significant rise in demand, and that would require an influx of first-time buyers – house prices are already high in relation to average earnings, and so simply getting a deposit together is a serious barrier to entry to new comers, and therefore is limiting the fresh demand. Many experts believe that the near-term will see a continued strengthening of the market, with modest prices rises to accompany this.