Real Estate

Factors Affecting The Property Investment In London

The property market in London is highly unpredictable. In the past few years the property market has seen many booms and depressions. The property market and the price of the houses in London are dependent on a number of factors. Some of them are discussed as here under, have a look at these.

Income of The People: Property investment London is highly dependent on a person’s income. With the increase in the income of the people the economic growth of a country increases. This economic growth leads people to invest more in properties. Rise in the income leads to more spending of this income in properties. Thus property investment is directly proportional to the income of the general public.

Unemployment: Unemployment is inversely proportional to the property investment in London. As unemployment rises in a country less people would be motivated to invest in properties; they cannot afford such huge prices of the properties when they have no jobs.

Confidence of the Customers: Confidence plays a very important role in determining whether people really want to take a mortgage. If the consumer’s sense that the future prices of the properties will fall they will defer from investing in properties any more.

Interest Rates: Investment in properties and mortgages are directly linked. So a slight rise in the rate if interest affects the cost of monthly payments towards mortgages. Therefore a hike in the interest rates will raise the cost of payments towards mortgages and eventually the demand for investing in properties will decrease substantially. In such a scenario people will find renting a house more profitable instead of investing in a property by buying it. However if the owners of the properties have large and variable mortgages plans then the rate of interest will have a greater effect on the property market instantly.

Help From Banks and Other Financial Institutions: Availability of mortgage loans from banks and other financial institutions allow people to have larger in hand incomes that they can think of investing in properties. This ease of availing a mortgage led the demand for investment in the properties a thousand times more in the recent years. Moreover the banks require low deposits towards mortgages which mean they are able to take the benefit of hundred percent mortgage. As a result people are now in a position to afford the huge investment towards the properties.

Ratio of the Price of the House to the Respective Earning: This ratio influences the demand for investment in properties. As the prices of the house increases in relation to the respective rise and fall of the income, the affordability of the people who were once ready to invest in properties now will lessen substantially.

Geographical Location: The geographical location of the market is yet another determinant to the rise and fall of the demand for investing in properties. Even if the national price for properties fall there are some places where the demand will be still high and the prices of the properties will be high too.

Thus the property investment London is dependent on a number of factors and no one factor can influence the property investment.

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