You would think that growth in the UK property market would be a good thing, right? While this undoubtedly has a largely positive impact on the British economy, there are scenarios where this can create issues for the UK. Take the recent growth that has emerged in the marketplace, for example, which has seen prices exponentially and lead to the development of a sellers’ market. This has hardly been helped by a lack of viable housing and listed properties on the market, which has caused demand to outstrip supply by a significant margin.
Is there a plan to restrict growth in the Marketplace?
With this in mind, there are signs that the UK government and the Bank of England (BoE) may be taking steps to regulate the market and restrict the level of growth. While the manipulation of interest rates has always been used as a method of regulating growth in a specific market, this type of economic strategy often draws criticism from experts. The fact remains that the property market continues to grow beneath the shadow of the great recession, however, meaning that regulatory bosses would prefer to act now rather than waiting for an economic crisis to take hold.
There have been several signs that the government and the BoE are striving to consolidate and control growth in the marketplace, starting with the implementation of a higher stamp duty applied to price of upwards of an including £935,000. This has already restricted growth in the prime London real estate market, which recently slowed for the fourth consecutive month. While the impact of this is only likely to be short-term, it is enough to contain growth until the supply of available properties and the market‘s equilibrium is restored.
The Last Word
An article on www.propertyrescue.co.uk also recently confirmed that plans for the BoE to regulate the prosperous buy-to-let market may also be a part of this drive, as the powers that be strive to limit growth and drive greater balance in the sales market. While such an ethos has met with a mixed reaction from experts, there appears to be no doubt that this is a clear move to restrict growth in the short-term and consolidate the industry until supply correlates more closely with demand.
Regardless of the merits of such a strategy, there is at least some logic in consolidating growth and manipulating the market to avoid a future crisis. This at least allows some time for balance to be restored and the supply of available housing to increase.
