UK house prices to stay stable says ratings agency Moody’s
It would appear that the housing market is behaving in the self-regulating fashion that we have come to expect in the UK, despite the continuing economic uncertainty.
A recent report from Moody’s, the global credit rating agency, concludes that the UK’s low housing supply will help keep property prices stable during the downturn.
Unlike consumer goods such as TVs and furniture, there is little surplus of housing stock. People generally have only one unit of the asset to sell and so supply is relatively inelastic. In addition, new property development has been subdued since 2008; in fact 2010 saw the lowest number of new properties built in the UK since 1923.
It will take several years for supply to return to pre-2008 levels whereas, although demand for homes has been reduced by lower income, higher unemployment and restricted availability of credit, these factors have been offset by a rise in the number of households, due to young people setting up home, immigration and divorce.
In fact, prices are rising steadily where people are trying to move up the property ladder, but established owners at the ‘top’ of the ladder are staying put because of the lack of supply of suitable property for downsizing.