The Potential For A Property Bubble in 2014

This following post was written by Jamie Hunts. He writes for the Guernsey estate agents (Livingroom) that are based in the United Kingdom. If you’re interested in purchasing properties, then the article below may be right for you.

We are all familiar with the workings of how to make a bubble. You dip the wand into the bubble solution, blow on it gently and you have a bubble. However, if you keep on blowing the bubble is going to keep increasing in size until it suddenly bursts.></a></p>
<p>This is essentially how a<em> >. The value of real estate increases rapidly, until it reaches an unsustainable level causing the market to sharply decline, and with it losing lots of people a lot of money, which in turn causes knock on effects throughout the rest of the economy.</p>
<p>As you have probably deduced, it is not desirable to have a >
<p>Apparently quite high according to a leading UK >
<p>As such, it boils down to an increased demand for a not increased amount of >(standard demand and supply economics)</em>. Can we see how this is starting to look like the beginning of a bubble?</p>
<p>So what does this mean for you? Well there are a variety of scenarios that could occur or apply to you. Firstly, you either can’t afford to buy regardless of the inflation and interest rates or you are comfortable in the home that you already own. As far as prices go, you are unlikely to be affected negatively. If you own a home, the price may reduce as an effect of the bubble as a whole, but as you didn’t purchase at the inflated price you won’t be hurt too badly.</p>
<p>On the flip side, if you purchase a new >
<p>The final scenario that I am going to discuss is the Central Bank increasing the base interest rate. This would then mean an increase in mortgage interest rates, so less people could afford to purchase >
<p>If you are looking to purchase in 2014, make sure you take these market factors into consideration and be sure to speak with your local estate agent for further advice.</p>
<pre style=Photo Courtesy of james.thompson

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