Is the home upgrade cycle coming to an end?
In almost 90% of all cases, a house will be the most valuable asset that the average person will possess in their lifetime. Buying a home is supposedly one of the biggest life motivators for any person, and the loan associated to purchasing a home is also one of the biggest (if not the biggest) financial commitments.
Over the last decade or so, Brits have become somewhat obsessed with the property market, or more specifically the property ladder and finding the most effective way to scale it.
New research by one of the countries leading home loan providers has discovered that over ¼ of all homeowners expect to sell their home, within four years of purchasing it. The study appears to suggest that homeowners are relying on continued market strength to boost the available equity within their property over a sustained period, allowing them to upgrade to bigger, more valuable homes in a continuing cycle. The trend is also noted to be most prevalent amongst younger people.
However, the housing market is rapidly changing. Rising interest rates, coupled with heavy market saturation are starting to take their toll. Each year, for the last 10 years house prices have rose by around 15-25%. This growth has allowed many property savvy Brits to substantially upgrade the scale of their homes, in a relatively short amount of time.
The first 6 months of 2007 noted the smallest national property value increase for years, causing experts to speculate that prices may soon start to come down. The average house is now valued in excess of £200,000 which has caused literally thousands of first time buyers to either rent or join shared ownership schemes.
No one knows for sure how the housing market will progress, but many agree that the vast equity gains that have been enjoyed may soon be a thing of the past.
