Its demand as well as supply (stupid!)


Why have house prices gone up? The Lyons report states:

The lack of new housing supply has contributed to the rampant increase in house prices over the last twenty years. House prices have risen from 4.1 times earnings in 1994 to 8 times income in 20146. The relationship between earnings and house prices fluctuates over time but there is clearly an increasing
trend.

Comment
Well it is not just housing supply its demand. Demand from the affluent for luxury homes, second homes and investment property has pushed up house prices!

The population has increased – allowing the free movement of labour has meant considerable numbers of people moving to the UK and that pushes up demand for housing. Contrary to the view held by some people, immigration does have an impact on demand for housing!

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