Everyone knows house prices can increase or decrease in value, however, history and experience shows that in the medium to long-term, house prices will increase an average 5-8% year on year. In real terms, a property will double in value every 7 to 12 years. It is important to understand the factors that influence the price increases.
Why do house prices increase in the long term?Government figures show a massive shortage of good quality housing in the right locations in the UK.
a) This in the main is due to demographic and social changes such as smaller family units, more people living alone, high divorce rates and more of our senior citizens living longer without the appropriate funds.
b) With the continuing expansion of the European Union, larger numbers of immigrants and asylum seekers are being allowed into the UK, thus creating far greater need for more housing.
c) There is a definite increase in the number of people who are upgrading to larger premises and no longer wished to sell their old home, but would rather rent out their home to create a monthly income, thus realising an asset they can leave to their siblings.