c) If a leading manufacturer has closed down or moved overseas to cut costs, then this has an effect on the local housing market as employees may be forced into repossession or down grade. This in turn will create an abundance of houses for sale in a specific area, over a short period of time.
d) Lack of regeneration in depressed areas of the country will force people to sell and move out. If this is not addressed by the government then there will be wave of houses being placed on the market creating an over supply.
e) In every property cycle of 7-12 years there is a short term dip in house prices brought on by several economic factors such as recession, tightening of lending, natural disasters etc. Borrowing money to buy your assetsUnlike the stocks in the shares market, a bank will allow you to borrow large sums of money to purchase your properties. The lenders (banks) are knowingly confident that should you ever fall behind on your repayments, they can repossess the property and still make a handsome return on their investment. For this reason banks encourage the lending on properties.
Let’s look at a simple investment equation.You wish to buy a property worth a £80,000 with a buy-to-let mortgage. You approach the lender (banks ) with a deposit of £12,000 which is approved. Once you’ve purchased your property, its value increases by an average of 8% to £86,400.