UK housing: what boom?

Article Abstract:

The UK housing market is weaker in 1997 than it was at the end of the 1980s, according to Nikko Europe, which does not see house prices as an inflationary threat. Transaction levels have dropped from over 1.9 million from 1986 to 1988 to 1.2 million for 1995. Mortgage lending rose to 68 billion pounds sterling in 1995, but this is some 75% of the level of 1988 in real terms. Tax relief on mortgages has been reduced while arrears and repossessions have increased compared to the 1980s. Real post-tax incomes are not riing as fast and inflation is lower.

Economic aspects, Housing

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Investment market

Article Abstract:

The UK real estate industry saw an increase in values toward the end of 1993, but rental value gowth was weak in 1994. Investment demand has been affected by a number of factors such as a reduction in occupational requirements due to corporate restructuring, and corporate sensitivity to the cost of rents. Pension funds will need more liquidity in their assets which could mean a reduction in real estate holdings. Performance varies according to sectors, with demand strong for high quality space.

Institutional investments

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The short, sharp shock for house prices

Article Abstract:

UK house prices may be more closely linked to costs than is thought which could mean that prices rise by more than expected due to low interest rates and expectations of appreciation. This could explain why lower tax advantages were linked to a sharp drop in prices from 1987. Interest rates could have a major impact on prices, as could fear of rate rises. This could mean that the rise in house prices will cease in 1997 when interest rates are expected to rise.

Interest rates

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