Can I just ask why the estate agents are not doing anything regarding house prices. I am a waiting first time buyer that cannot afford to live on her own in a one bedroom flat. I live with my mum who bought our property 7 years ago for £75,ooo and the estate agents now estimate it at £178,000. It is appalling. Why aren’t the government stopping estate agents putting these huge prices on the flats/houses?
With all the talk of a potential fall in house prices, it is easy to forget that house prices in the UK are very high, making it very difficult for first time buyers to get on the property ladder.
To be fair to estate agents, I have to say they don’t have any control over house prices. House prices are determined by the market supply and demand for houses. Even if they wanted to, there is little that they can do to reduce house prices. Of course, estate agents have done very well out of rising house prices. – If they take 1% of the house value, this 1% is worth a lot more now than 10 years ago.
There is a stronger argument to say the government should intervene to create more affordable housing. See government intervention in housing market
The reason that house prices are so high in the UK is that basically the demand for housing is growing faster than supply.
Demand is rising for several reasons
- Increase in the number of households. - More single people due to e.g. divorce and pensioners living longer alone.
- Immigration. Immigration from Eastern Europe is a big factor, especially in the south east.
- Rising incomes / bonuses. This is especially true in the London area, but may be changing soon.
- Low long term interest rates. Interest rates have been relatively low for a number of years. At least compared to previous decades.
- Easier finance. To cope with the rising prices banks have been willing to offer more unconventional mortgages.
On the other hand the supply of new houses is increasing at a very slow rate. The building of new houses is at its lowest level since the second world war.
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