Demand for Housing
Demand for housing has a number of factors but the main one is that the UK is one of the best countries in the world. We have a well policed society with an open, accountable and democratic government, one of the G7, part of the EU, have great bilateral relations with the USA both economically, culturally and for defence. Our economy is the 4th largest in the world and we have increasing immigration. What this adds up to is that as a country, we're in demand and this makes investing in property a bit of a no-brainer.
Property in the UK generally increases by an average of 8% per annum (including inflation), which means that this doubles in value every 7 years. This has certainly been true on average, for the last 50 years - even where we have had instances of negative equity during the early 1990s when the last slow down in house prices occurred. During this time we had negative growth of 4% for a couple of years and it seemed that the world had ended!
The Barker report in 2004 has stated that to satisfy demand for housing we need to supply 140,000 extra private accommodation houses and 23,000 social housing built every year to satisfy demand. This essentially means that whilst we won't satisfy that demand, there will always be a shortage and for as long as this happens, demand will keep rising and house prices will continue to increase.
Immigration is set to increase as the UK becomes wealthier and more people come to get a better life. The factors listed above make the UK attractive to live here - there's no one overall factor that makes this the country attractive.
So we can see that to satisfy demand we'll need an extra 160,000+ homes, there is no sign that the supply and demand equation will even out, driving prices ever higher.
Return from Demand for Housing to House Prices