How does the economy affect the property market?

 
How does the economy affect the property market?

It seems like a pretty obvious statement to make, but the property market in the UK is one of those sectors that is most often affected by external financial factors, with other areas of the country's economy often having a real hand in deciding how the housing market performs.

Examples include the way the market crashed quite spectacularly back in 2008, when the recession hit the UK, taking people's earning power down and causing banks to tighten their lending conditions, which greatly reduced the number of homes sold.

However, the opposite can also be true, and it doesn't always just have to be a negative impact that the economy has on the market - in fact, positive factors elsewhere are currently helping to boost the sector, a reality that can be shown by the way certain areas are really starting to flourish.

Since the middle of 2013, the British economy has been in a period of recovery, slow and steady, but recovery nonetheless, which gave confidence to a number of different sectors. 
And with the economic growth this year expected to sit at around the three per cent mark, it has meant there have been more and more business starting to feel more confident, hiring newer members of staff and growing their operations all the time. 

It is this economic factor that has had one of the most significant and instantly noticeable impacts on the property market as well, according to Lloyds Bank. It stands to reason, of course - when people are gainfully employed and have a steady income, they will rightly feel more confident about buying a home. 

Lloyds Bank research shows this trend off rather clearly. It said that in inner London and northern Scotland, house prices are accelerating at faster rates than anywhere else in the UK as sales numbers escalate. The bank added that it is in these areas that employment levels are by far the best in the country.

In the London areas with the best recoveries in employment rates in the last few years, the uptick in house prices has been quite impressive. All of Hackney, Southwark and Lambeth have outperformed the rest of the city, and these have seen house prices climb by some 84 per cent, 78 per cent and 76 per cent in the last decade. 

These have all seen their unemployment rates drop by between 1.1 per cent and 1.8 per cent since 2004, far outperforming the rest of the UK. This has helped to attract far more people to live and work in the areas, and helped to show just how significantly the external financial issues can affect the UK property sector.