In this revision video we will be exploring some of the arguments about whether rising property prices are (on balance) positive or negative for the health of the UK economy. The housing sector bridges both micro and macroeconomic issues and addressing housing issues is something that has become a major challenge for governments of all political persuasions. One of the big uncertainties at the moment focuses on how will Brexit affect UK house prices and mortgages.
Home-ownership in the UK
In Britain, just under two thirds of households own the house they live in and half of these are still paying off their mortgage. The remaining third of households are renters, split fairly equally between private and social renting.
Average house prices
House prices in England and Wales are now more than £230,000 - with significant regional variations.
One reason for the strong rise in house prices in recent years have been cheap money – lower mortgage interest rates has made it easier to buy homes and has pushed up prices all around the country. A recent article from Sky’s Ed Conway made the point that for some parts of the country, the problem isn't the number of homes out there but their quality with a decaying quality of housing making them less attractive.
Regional house price differentials
On a regional basis, London continued to be the region with the highest average house price at £485,000, followed by the South East and the East of England, which stood at £327,000 and £295,000 respectively. The lowest average price continued to be in the North East at £132,000. But prices in London now seem to have almost stopped rising. At the time of the Brexit vote in June 2016, London house prices were growing at an annual rate of 12 per cent. But recent statistics show that they fell by 0.4 per cent in the year to May 2018.
Benefits from rising house prices
Drawbacks from rising house prices
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