As of early 2022, the UK’s economy appeared to be moving steadily, with low mortgage rates and controlled inflation. In recent months though, the dream of owning a home in the UK has become increasingly out of reach for many, while homeowners on a mortgage are experiencing a level of financial stress not seen before. The cost of living and the mortgage crisis is exerting severe pressure on household finances. Let’s delve into the complex factors that have contributed to this challenging landscape.
Structural Issues Supporting House Prices
Low Housing Stock: The UK faces a significant shortage of housing supply. Approximately 300,000 new houses need to be built annually to meet demand, yet only around 200,000 have been constructed on average in the last three years. Stringent planning permissions, especially in green belt areas, have further constrained construction. Demand for housing continues to grow, exacerbating the shortage.
