The Real Estate Encyclopedia
How home availability affects prices in the housing market
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Property prices in London are the topic of constant discussion. One of the major criticisms is that there are not enough properties being built to accommodate the ever growing quantities of people expected to move here over the next few years. And we all know that lack of supply increases demand, pushing house prices up even further! Reports have also shown that the equivalent of 18 new Olympic Villages is needed to address this ever- looming crises that could cause all sorts of problems in the future regarding house availability and Londonís reputation as a centre for international businesses and entrepreneurship.

There have been noises from political figures keen to see an increase in house building in the UK capital. London Mayor, Boris Johnson has already set a target of 42,000 new properties that he wants to see built annually and has praised news that thereís been a 60 percent rise on 2012 in terms of new flats and houses being registered. However, with Londonís population growing by about 100,000 a year, it seems unlikely that Johnsonís efforts will be enough. Currently the capitalís population is around 8.2 million; but it last peaked at 8.9 million in the 1930s. According to data, at this point some 60,000 homes were built a year; but at the moment the construction pipeline demonstrates thereís a 21,500 shortfall a year.

As well as this, thereís been a lot of political commentary on the plight of young people and their problems getting onto the housing ladder. It also seems as if Help to Buy is proving more popular than ever. Figures from the Department for Communities and Local Government, show completed house sales in England under the scheme jumped from 2,133 in November to 3,410 in December, with most of the loans going to first time buyers. With more and more young people living at home, with homeownership seeming more and more out of reach (unless of course they take up the government scheme), it seems a bout of excessive homebuilding is the only way prices could reach some kind of equilibrium. Right now, there has been concern from industry experts that a lack of supply will lead to a housing bubble. Also, with interest rates at a record low, this encourages buyers to borrow and means competition is excessively strong for property buyers; with properties going onto the market and often snapped up the next day. If you add to the mix the fact that the popularity of London with overseas investors is also pushing up prices, this means thereís a market that is in excessive high demand but, unfortunately, without the supply to meet this at the moment.

 
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