The UK housing market is very sentiment-driven and reflects the same sort of behavior as that of the stock market by moving between extremes of overvaluation and undervaluation against the UK 's GDP growth. Sentiment-driven is meant that people tend to make decisions based on feelings and emotions rather than based on hard facts and realities. If people notice that demand for housing units has increased, they immediately assume that prices have fallen or loans are available at cheaper rates so it is a good time to buy. But speaking, they must also consider their job situation and ability to repay the loan before going forward and booking a mortgage.
Some of the peculiarities to be noted about the period 2000-2010 in the housing sector in Scotland are that this sector had been markedly affected by the varying costs of renting or buying a property. Consumer incomes and living standards also affected the affordability of housing purchases. At the other end, recessionary trends in the world’ s economic climate since 2008 have also affected Scottish housing prices; cost to and the number and type of development projects in any given area led to gluts in some localities with sparse developments in others.
This, in turn, led to increased demand for civic amenities, and there was evidence of overcrowding in some areas and under-occupancy in others. Is the Housing Sector in Scotland Volatile and What Are the Reasons for This? The demand for housing depends upon the income of the consumer, the price of a house relative to renting or sharing accommodation, the number of houses put up sale in a particular period, let’ s say a quarter- and the cost to build a house relative to purchasing a readymade one.
Change in any of the above variables would affect the price of housing in a particular quarter. In normal cases, if the economy is doing well and incomes increase, demand for housing will increase as well. But because the demand for housing is a long term decision, the consumer has to consider his permanent sources of income that can be used to fund a mortgage.
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