UK Housing Market: Is the Bubble set to Burst?

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Introduction

Key Points

  • The UK housing market has been defying gravity, with prices buoyed by ultra-low interest rates, inelastic supply and central policies aimed at stimulating demand.
  • An extremely rigid planning system, a rising population and an increasing reliance on the private sector are key factors that have been constraining supply for over forty years.
  • In the wake of the Global Financial Crisis, as housing affordability for the UK population became challenged due to tightened lending standards, demand was sustained through government‑backed schemes, a trend of lengthening mortgage terms and an unprecedently long period of low borrowing costs.
  • Now, as rapidly evolving global and national macroeconomic headwinds threaten to destabilise the UK economy, a demand shock in the housing market appears all but certain to drive down prices, however questions remain over the magnitude of such a decline.

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UK Housing Market: Is the Bubble set to Burst?

11 Nov 2022

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