Discover how supply and demand in the housing market dictate the value of your home

Discover how supply and demand in the housing market dictate the value of your home

Markets are volatile. They can go up and down in the blink of an eye for seemingly minor reasons. Something happening in the world can impact the value of stocks and shares here in the UK without you knowing there would be a connection. As circumstances change our lives, the property market responds accordingly

Markets are volatile. They can go up and down in the blink of an eye for seemingly minor reasons. 

Something happening in the world can impact the value of stocks and shares here in the UK without you even knowing there would be a connection. 

Stockbrokers and hedge fund managers try to watch and see how things will play out, betting for or against things to try to make money. Essentially, it's just like gambling. Was your guess correct?

It can be exhilarating. The thrill of watching things change in the market and playing your hand to make the most of the circumstances. 

And although less volatile and reactive than the stock market, the housing market works the same way. 

As our lives are changed by circumstances, the property market responds accordingly. It's driven by supply and demand. 

After being stuck in our homes for months through the pandemic, many of us decided that we would move house. So, after lockdown restrictions were lifted, many of us rushed to put our homes on the market. This massive influx of new prospective home movers coming to the market increased the demand for those homes that were being advertised. The increase in demand meant that property prices were pushed up as people offered against each other, battling to be the winner of the highly coveted new home. 

As this demand continued, homeowners could increase the price of their houses.

There were more buyers than were available homes, pushing up those prices. The demand has outstripped the supply. 

Now, if buyers suddenly decided that they weren't going to move, the properties on the market would receive less interest. 

Viewing numbers would decrease, and offers would be few and far between. 

To get buyers interested again, those sellers will begin to reduce the price of their homes. And so, we will see a reduction in property values and the demand reduced, and we will have an oversupply of available properties. 

Think about it, if you're trying to buy a property and there are 15 other offers, and they are all increasing, but there are no other properties available that you want, you will do whatever it takes to get that house. Offering higher and higher until you have reached your limit because no other properties are available.

But, if there were about 5 properties that you would be interested in buying, and only a few people viewing but none of them had made an offer, you have all the time in the world. 

You could make low offers on each property and see the sellers' reactions. You never know; one of them may be in a hurry and be willing to take less. As this scenario plays out with thousands of sellers across the country, the whole market trend will slow down and reduce overall prices. The demand simply won't be there to push prices up anymore. 

Predictors suggest that the housing market will slow down in the coming years. This is a fair assessment, as historically, it has settled down after a significant increase, but if you want to move house, now might be the best time. The market is still a sellers' market with lots of buyers looking to buy and prices still high.

Get in touch if you would like a chat with one of our property experts about the market.

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