PHOTO: House prices are spiking up again. Photo credit: Getty
House prices are spiking again, with “affordable homes” showing most growth. That’s no surprise really, with multiple factors in play.
Market instability due to COVID-19 is driving asset acquisition — property is the classic port in a storm for investors. Interest rates are at all-time lows and likely to stay that way. The pandemic has curtailed people’s spending, costly holidays are cancelled, socialising is limited and home working has reduced travel costs.
Overall, homeowners have more disposable income. This has led to an uptick in home improvements, renovations and real estate activity. Media coverage adds fuel to the fire by breathlessly reporting rapid price rises. First-time buyers panic that they will miss their chance.
Bottom line: the conditions are in place for a house price boom.
Into this febrile atmosphere stepped the Property Investors’ Federation CEO, claiming first-time buyers were causing recent price rises. The reasoning was that people moving out of a flat to buy a home — one that was previously a rental property — effectively reduce the available housing stock.
This is unfair at best. It shifts blame onto a younger, poorer demographic for reduced cost efficiency and return on investment. Those buyers may be looking to settle down and start a family. They are already largely locked out of the housing market by the depredations of property speculators and investors.
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