UK’s property bubble to hit new peak in 2018 as property prices soar
A bubble is the name given to the property market in Britain, where there are typically two distinct bubbles: the initial one and the longer-term one.
The initial bubble was triggered by the 2008 global financial crisis.
But since then the property bubble has been fuelled by a combination of factors, including strong demand for homes in Britain’s wealthy areas and a glut of supply.
There are a range of reasons for this, from the recession, the rise in inflation, the high cost of housing and a boom in investment in the form of new homes, but the key factor has been the huge increase in house prices.
Since the UK’s economic downturn, the price of a home has doubled, reaching levels not seen since the 1930s, according to property website Property Intelligence.
In the last 12 months, house prices rose by more than 30 per cent on average, reaching an average of £500,000, up from £330,000 in the same period last year.
The rise is largely due to a sharp fall in the cost of living.
According to the latest data, a standard two-bedroom house in London cost an average £1,834 in June 2018.
This rose by a further £1.14 in June 2019 to £1-1,973 in June 2020.
On average, an average two-bed house in the UK costs £1m-£2m, according a report published last year by the UK Property Institute, a group of property professionals and academics.
The average price for a three-bedroom property in the capital is £1million.
This is partly because of the huge rise in house price over the last five years, according the report.
The total amount of property transactions in the last year was up by 12.7 per cent compared to the previous year.
“This is a period of unprecedented housing affordability for the UK,” the report said.
However, this is just one part of the story.
Another key factor is the boom in the construction industry, with house prices rising at twice the rate of the economy.
A third factor is a rise in foreign buyers, which has pushed up house prices across the country.
This has contributed to a surge in the supply of new properties, as well as a shortage of supply, which in turn has pushed down house prices, according Prof Simon Chapman, from Cambridge University’s economics department.
He said that while there were some positives to this, it was also a bubble.
It was a bubble that has had the effect of stimulating demand and driving prices up and that has driven up prices over the longer term.
“We are entering a new bubble in the property markets and it is now getting to a point where we are probably seeing a bubble bursting,” he said.