HOW PROPERTY STOCKS OUT-PERFORMED PROPERTY PRICES. OVER 6 YEARS FROM 2009 TO 2015.


IS HOUSING A PART-CONTROLLED MARKET?

Below shows a chart that displays what is correlated with house prices. What is noticeable is that 6 main economic factors contribute towards the momentum in home prices and all 6 of these are majorly dictated by 2 entities both being the government and monetary system (bank of England). So yes, we strongly believe that house prices are mainly dictated by the decisions and actions taken out by our government and the bank of England. Government schemes have no doubt pushed up recent prices; The bank of England’s interest rate decision has allowed access to cheap capital by banks and the public, the government’s decision to allow Britain to be a safe-haven has introduced new foreign capital into Britain, relaxed housing regulations have also contributed towards the recent price rise and these are all perfect examples of why we believe housing is a partial controlled market. We do not believe housing is controlled for the advantage of institutions or certain individuals but we do believe it is controlled for the good & economic growth of Britain. History has shown us that those who buy houses upon the fundamentals, not the bandwagon, are those who will gain the most equity upon their asset.

MORTGAGES

MORTGAGES

FOREIGN MONEY

FOREIGN MONEY

INTEREST RATES

ECONOMIC GROWTH

ECONOMIC GROWTH

IMMIGRATION

IMMIGRATION

GOVERNMENT SCHEMES

GOVERNMENT SCHEMES

HOUSE PRICES

We have compiled below a few bullet points that show what areas we are looking at that could possibly ‘trigger’ this market to crash. These same areas have also been the trigger for historic bubbles to burst however in this modern day and age where capitalism is global and more informative than ever before, these triggers can be international as well as national.

  • BRITAINS IMMIGRATION SLOWING DOWN

  • HIGH RISE IN INTEREST RATES

  • STOCK MARKET CRASH

  • DECREASE IN GOVERNMENT SCHEMES

  • GLOBAL ECONOMIC SLOWDOWN

  • A TIGHTENING IN THE SUPPLY OF CREDIT AND MORTGAGES

  • BUYING CONFIDENCE DECLINES

  • A RISE IN UNEMPLOYMENT FIGURES

  • NEGATIVE VIEW UPON THE MARKET FROM THE MEDIA

  • FIRST TIME AFFORDABILITY DECLINING

  • AN INCREASED SUPPLY OF NEW HOMES BUILT

  • NEW REGULATIONS AND RULES COMING IN PLAY

All of the events and actions above alongside the effects they can produce, all have a connection towards the property market. We are currently seeing some of these playing out as we speak. First time affordability has been declining, Chinas market has seen a crash and much volatility, even articles released and hedge funds have stated publicly that the property market is in a bubble. It seems to be that it will require a big event for the downturn to occur.

The main events that will trigger this market to crash will be mortgages, unemployment figures, interest rates and a possible bad Brexit.

So do keep an eye on all the above events and the market during 2018, it will be very interesting to see how this market unravels and what will contribute towards this to happen.