Each day brings a different headline about the real estate market, the outlook for the future and the impact which the forthcoming Brexit move will create. Whichever view you take regarding Brexit, and the future of the UK property market, there will be a headline and an article to fulfil your appetite. However, the UK property market in its simplest form is really based upon supply and demand.
Economic power
The performance of the UK economy literally puts pounds in people’s pocket which allows them to spend money in the economy and invest in property. This is why the economy is such an integral part of the UK property market. This is not rocket science and it is obvious that the better the economy does the more spending power for individuals and the more interest in property.
Value for money
Everybody uses the term “value for money” when investing in the property market but what does it actually mean? In simple terms it literally means are you getting a good deal on the price you are paying today. Is there potential for long-term capital growth, rental income or a mixture of both? Value for money is a fairly vague phrase which is often bandied around by investors and in its purest form it means, does the price you are paying today offer you potential to make money tomorrow?
Rental market
We hear all the doom and gloom about the UK property market ahead of the triggering of Article 50 but the simple fact is that the economy is holding up well and those who cannot afford to buy property are simply renting. This rental demand may be taking some pressure off the purchase market but then again it is encouraging buy to let investors to invest money and let out their properties. So, while one buyer may exit the market to rent a property, another will enter the market to create a rental income stream.
Supply and demand
The levels of supply and demand across the UK property market are impacted by many different factors, such as the ones above, but this is a property market operating at ground level. If the economy is doing well then demand increases and very often potential sellers hold off thinking they can get a better price tomorrow. If the economy is struggling then buyers will sit by the wayside, sellers will come out of the woodwork and prices will slowly drift.
At some point sellers will come in when the market is flying high and buyers will come in when the market is bombed out. This rebalancing of the property market is ongoing and ultimately reflects the confidence and the mood amongst property buyers and property owners.
Conclusion
There are many different factors which impact property markets around the world but the simplest formula revolves around supply and demand. There are many different issues which will impact supply and demand but monitoring the number of buyers and the number of sellers will give you an idea of which way the market will go. The easiest way to monitor the number of buyers is to see how long properties remain on the market. The easiest way to monitor the number of sellers is to monitor the number of properties listed online and in estate agents windows.
Sound simple?