The housing market continues to struggle for improvement throughout the country. While property values for the richest members of society continue to increase, other home prices are struggling to even maintain their current values.
According to one realtor, the prices of homes in London have already increased by 5% in the first two months of the year. She originally forecast that increase for the entire year, which would have been impressive in and of itself. Some of the prime locations for houses in the area include Kensington and Knightsbridge. Of course, even around London there is still much variability with prices. The average house is going for less than a million. However, there are plenty of others that are going for close to 2 million pounds of more.
Ironically, the increase in prices for houses in London comes from property owners who have no interest in doing anything with them. These homeowners are just looking for a place to store their wealth. They rarely live in the house themselves and do not want to go through the headaches of renting the place out.
Many of these clients are purchasing multiple houses. In some cases, their purchases amount to up to half a dozen properties in the area. They may have a house for themselves and others for each of their children. Many of these investors are international investors who have a vested interest in purchasing properties in the UK. This has fueled demand for housing which in some areas has increased housing prices by almost 10%.
The balance of power has clearly shifted from buyers to sellers. Realtors can make any demands they like on their buyers. In many cases they refuse to even acknowledge a client unless they have demonstrated that they have the means to pay top poundage for the properties they are selling. Sellers are often even conducting background checks to verify the buyers’ abilities to pay.
Although demand for houses in London continue to increase substantially, other realtors are finding it much more difficult. Demand for houses in some areas such as Hartlepool are down substantially over the past year. They did rise slightly for January, but that increase only reflects about 2% of the property value that was lost over 2011.
The discrepancy between the housing prices in the UK may be a reflection of declining class mobility and address serious problems with the economic reform model the country is experiencing.