The Demand for Houses in the U.K. for the Next Ten Years

The Demand for Houses in the U.K. for the Next Ten Years
The last decade has brought upon us one of the most memorable housing
booms in British history. House values have reached record prices
creating a false sense artificial wealth for many people and therefore
leading many people into debt. The last year has shown a slow down in
the inflation of housing prices; and in many areas a seemingly
stagnant market.
The debate surrounding the future of the UK housing market has been
somewhat contradictory in the last few months. On the one hand, much
of the information released this year by building societies such as
Halifax and Nationwide, has revealed that property prices fell by 0.5%
and 0.6% respectively in March, and that the annual rate of house
price inflation fell below 10% for the first time in three years. On
another hand, you?ve got the house builders, such as Westbury Homes,
Wimpey and Taylor Woodrow, are claiming that the outlook for the UK
housing market is a lot brighter than people think.

Wimpey, reported recently that profits before tax during 2004 were up
19% to £450.7m, and announced that ?visitor levels and interest have
been encouraging, and reservations at the stronger end of our
expectations?.

Many experts are now predicting a flood of new money into the
buy-to-let sector of the property market which is due to the
confirmation last week that from April 2006, investors will be allowed
to hold residential property within a pension fund.

UK population is increasing at a rapid rate partly due to a large
amount of immigration in the last decade; many of these people seek
housing in the UK creating an increase in demand for houses; however a
proportion of these people have sought asylum in the UK and are unable
to afford the current housing prices so therefore go into rental
accommodation. I think in the short term this will result in an
increase the amount of people renting houses but might also cause a
shortage of houses available for rent; therefore creating a higher
demand for rental properties.

Interest rates also determine the demand for housing as people are
unable to go into mortgage arrangements if interest rates are too
high. This August interest rates were cut which has been said to have
increased short term demand for houses this Summer.

In conclusion: I predict that over the next decade; rising incomes, an
increasing population and increasing number of households should push
up the demand for both owner-occupied and rented accommodation in the
UK but in the short term other factors will have a large effect on the
demand for housing such as changes in interest rates, changes in law
and property speculation.

The Demand for Houses in the U.K. for the Next Ten Years 7.9 of 10 on the basis of 1966 Review.