e rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away

A look at why the UK housing market is susceptible to periods of volatile and Since 1992 the UK has experienced a long period of rising house prices. However there are many reasons to suggest this may not continue indefinitely. Although it is easy to forget in 1992 UK house prices fell by 15%. These are a number of factors which explain why house prices in the UK are volatile

1. Shortage of Supply. Supply is not responsive to changes in demand. Due to shortage of land and difficulty of getting planning restrictions it is hard to build more houses, in the quantity needed. The effect of this is that only a small increase in demand will cause a big rise in price. But at the same time, a small fall in demand would cause a significant decrease in price

2. Variable Mortgages. Most householders in the UK buy a variable mortgage. This means that as the interest rate changes there monthly repayments will fluctuate quite a lot. Recently real interest rates have been historically low, encouraging people to buy. However, when the base rate is increased many people find it increasingly difficult to afford the repayments. Therefore home repossessions rise causing prices to fall. This occurred in 1992 when interest rates rose to 15% causing house prices to plummet by 15 % in one year.

3. Buy to Let Speculators. There are an increasing number of house buyers who are motivated by the prospect of financial gains. They buy a house, rent it for income and then hope to make capital gains. When house prices are rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away

Shortage of Supply. Supply is not responsive to changes in demand. Due to shortage of land and difficulty of getting planning restrictions it is hard to build more houses, in the quantity needed. The effect of this is that only a small increase in demand will cause a big rise in price. But at the same time, a small fall in demand would cause a significant decrease in price

2. Variable Mortgages. Most householders in the UK buy a variable mortgage. This means that as the interest rate changes there monthly repayments will fluctuate quite a lot. Recently real interest rates have been historically low, encouraging people to buy. However, when the base rate is increased many people find it increasingly difficult to afford the repayments. Therefore home repossessions rise causing prices to fall. This occurred in 1992 when interest rates rose to 15% causing house prices to plummet by 15 % in one year.

3. Buy to Let Speculators. There are an increasing number of house buyers who are motivated by the prospect of financial gains. They buy a house, rent it for income and then hope to make capital gains. When house prices are rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away

>2. Variable Mortgages. Most householders in the UK buy a variable mortgage. This means that as the interest rate changes there monthly repayments will fluctuate quite a lot. Recently real interest rates have been historically low, encouraging people to buy. However, when the base rate is increased many people find it increasingly difficult to afford the repayments. Therefore home repossessions rise causing prices to fall. This occurred in 1992 when interest rates rose to 15% causing house prices to plummet by 15 % in one year.

3. Buy to Let Speculators. There are an increasing number of house buyers who are motivated by the prospect of financial gains. They buy a house, rent it for income and then hope to make capital gains. When house prices are rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away

me repossessions rise causing prices to fall. This occurred in 1992 when interest rates rose to 15% causing house prices to plummet by 15 % in one year.

3. Buy to Let Speculators. There are an increasing number of house buyers who are motivated by the prospect of financial gains. They buy a house, rent it for income and then hope to make capital gains. When house prices are rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away

e rising they jump on the bandwagon. When house prices are falling they start selling. Therefore this speculative activity magnifies any fluctuations in house prices.

4. Mortgage payments Mortgage Payments are a very high % of people’s disposable income. With house prices being high it means to get a mortgage many people have taken on the biggest mortgage they can get away with. For example some banks are offering mortgages 5 to 6 times a person’s salary. Therefore this means that if there is a rise in unemployment or slow down in growth, people are adversely and this has a knock on effect on the UK housing market.