Housing market confidence is closely tied to the state of the economy and strong employment and rising wages would normally support a confident housing market.
However, in the year to June 2019, while weekly earnings rose to 3.6%, house prices increased by just 0.9% over the same period, demonstrating the breakdown in the relationship between earnings and house price growth.
Therefore we currently have quite an unusual circumstance. Both the employment rate and wages are rising, yet Gross Domestic Product, a measure of the nation’s economic activity, has weakened, recording a fall for the second quarter and is expected to fall further.
So what does this mean for the residential market? Historically we have seen that slower house price growth alongside a strong rise in earnings, has helped improve affordability for homes.
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