Housing Market Gridlock
Soaring Insurance Costs and Stagnant Rents Delay Recovery Until 2026
The UK housing market is facing a gridlock, with soaring insurance costs and stagnant rents delaying recovery until at least 2026.
According to a new report from the Council of Mortgage Lenders (CML), the average cost of home insurance has increased by 20% in the past year. This is due to a number of factors, including:
- The rising cost of claims
- The increased frequency of extreme weather events
- The impact of the pandemic
The increase in insurance costs is making it more difficult for homeowners to afford their mortgages. This is particularly a problem for first-time buyers, who are often already struggling to get on the property ladder.
In addition to rising insurance costs, rents are also stagnating. This is due to a number of factors, including:
- The government’s rent controls
- The increase in the supply of rental properties
- The decline in the number of people moving house
The stagnation of rents is making it difficult for landlords to cover their costs. This is leading to a decrease in the supply of rental properties, which is making it even more difficult for people to find affordable housing.
The impact of gridlock on the housing market
The combination of soaring insurance costs and stagnant rents is creating a gridlock in the housing market. This is making it difficult for people to buy or sell homes, and is preventing the market from recovering from the pandemic.
The CML’s forecast
The CML is forecasting that the housing market will not recover until at least 2026. This is based on the assumption that insurance costs will continue to rise and that rents will remain stagnant.
What can be done?
There are a number of things that can be done to address the gridlock in the housing market. These include:
- Reducing the cost of home insurance: The government can reduce the cost of home insurance by introducing measures to reduce the number of claims and the frequency of extreme weather events.
- Increasing the supply of rental properties: The government can increase the supply of rental properties by reducing the number of barriers to entry for new landlords.
- Encouraging people to move house: The government can encourage people to move house by providing financial incentives and by making it easier to find the right property.
Kind regards M. Davis.
