Personally I think houses are wildly overvalued and that this is the elephant in the room that politicians don’t want to discuss because it it is too painfiul and contentious. The supply of houses is just way too low for the population / demand but unless we are prepared (personally I am not) to build all over what is left of our countryside, esp in the south, then the undersupply relative to demand will continue and prices will remain silly.
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I think hh45 is correct.
Supply and demand is the real issue with house prices, especially in the South. That along with London generating a lot of very well paid jobs (banking in particular), the trickle down effect of those well paid jobs will continue to fuel house prices. Also, at the moment it would appear that there are plenty of Chinese, Russian and Middle Eastern buyers in London buying high value properties, these buyers will help keep property prices high. Other areas in the UK might not benefit from this trickle down effect and we might see a temporary lull in the South with rising house values but I fully expect to see house prices start rising again.
The BBCs Countryfile highlighted the inflated house price problem last night with the feature on the Cotswolds, people want to live there and some people can easily afford to pay inflated prices and will continue to pay high prices for the privilege to live in these desirable areas.
Another problem we have at the moment is developers and financiers are not putting their money into housing projects that include social housing. They can get a better return on their money elsewhere so that doesn’t help with the supply of affordable housing.
IMO.