You could lose all your money invested in this product. This is a high-risk investment and much riskier than a savings account.
You could lose all your money invested in this product. This is a high-risk investment and much riskier than a savings account.
The housing market is the name given to buying a house to live in or as an investment.
House prices are linked to consumer spending. When homeowners are better off and more confident, they borrow more against the value of their home to supplement a pension or pay off other debt. This means that property prices rise.
However, house prices go down when people cut down on spending and personal investments. At these times homeowners are at risk of their property being worth less than the outstanding mortgage value.
Mortgages are the greatest source of household debt. If too many take out large loans compared to their income and or value of their property, puts the banking system at risk of an economic downturn.
Housing investment is a small part of measuring the economy’s output. Buying a new build property directly contributes to total output via investment in land, building materials, and job creation. Local communities also benefit, as new housing brings more people to the area to use the services available.
Buying and selling existing property doesn’t affect GDP in the same way. The costs from the transaction still benefit the economy, but through different means, such as estate agents’ fees, surveyor fees, and furniture costs.
There are several reasons why house values may go up:
Reversing a decades old trend, over the next five years growth in regional cities is forecast to outpace London and the South East. The North West is the fastest growing region with prices rising by 21.6%, followed by 20.5% across Yorkshire, and 17.6% in the North East. In comparison, London and the South East are only expected to see single figure growth of 4% and 9% respectively.
Generally, rising house prices encourage consumer spending, lead to higher economic growth, and are a good indicator of what the future holds for certain areas. By locating assets in cities with strong growth prospects, investors place themselves in a strong to position to enjoy high medium to long-term returns, and beat any short-term downturns.
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