House prices continue to rise in the UK. In London, prices have risen 11%, whilst in Cambridge and Bristol, 13% and 14% rises have been observed, respectively. Supply and demand is driving the rise. Behind the demand are several factors, including a rising divorce rate, which are creating the need for more single-person homes; as well as immigration and population growth.
Another reason for the price rise in UK homes is a combination of simple confidence and self-fulfilling prophecy. When people expect prices to rise, this causes increases to become a reality, causing even more confidence that prices will increase. Today’s reality is that market activity remains robust, despite predictions of a sudden drop due to economic uncertainty.
A Wealthier Feeling
Although higher house prices may seem like a negative thing, they are actually indicative of many positive occurrences. For example, higher house prices are a direct reflection of buyer confidence in their own financial stability. When a buyer feels wealthy and confident, they will spend more.
Homeowners can reap many benefits, including feeling as though they own a valuable asset, which they do. They can also ensure that this valuable asset benefits them well into retirement; when it’s time to downsize to a smaller home, the extra money from the sale can fund their retirement, or they can choose to enter an equity release scheme to produce needed cash.
Rising house prices mean that businesses are thriving. A higher turnover among small and medium sized enterprises in some UK cities has made them more prosperous. As well, this appears to be growing year on year. Another sign of economic resilience is coming from the charitable sector, which is experiencing a notable rise in charitable giving.
As demand for homes in Nottinghamshire continues to increase, so too will the supply. Construction companies may need to hire more people to meet this demand, as well as obtain more materials, which fuels the growth of those businesses who supply the construction sector. More jobs and purchases only serve to strengthen the economy further, as well as address the severe housing shortage.
A Higher Return for Sellers
With demand for homes being higher than ever, sellers have a golden opportunity to get the best price for their homes. This is also a good time to either downsize by buying a smaller home, or purchase that dream home. Regardless what option is chosen, homeowners have the opportunity to spend their additional money on more assets or invest it, either of which will serve to increase personal wealth.
Lower Interest Rates Help
The Bank of England recently halved its interest rate from 0.5% to 0.25%, which has also significantly affected consumer spending. With such low rates, homeowners can increase their security by locking in a low rate. As well, these low rates mean that buyers can take their time to choose the best home for them, which translates into long-term security and a confidence boost.
The current housing market means that homeowners are in an ideal position to maximise their savings, whether they choose to do so by purchasing a smaller home, or by using the acquired value from a home sale to purchase additional investment products or assets.