Residential Real Estate in the United Kingdom

The property market in the UK is important to the economy in various ways. When a newly built home is bought, it contributes to the GDP (gross domestic product), by means of investment in land, construction materials and creating employment. The locality also profits as new buyers start using services and local shops. The costs linked to a house transaction, from fees of estate agents, surveyors or lawyers as well as the purchase of furniture or even paint, benefit the economy.

There are differences between residential real estate and commercial properties. Location-wise, if looking at the South East, estate agents in Sittingbourne can clarify such contrasts.

Residential real estate

 comprises housing (homes or apartments) for individuals, families or groups of people. It is divided by types of accommodation and locations. There is a variety of residential properties – from detached homes, semi-detached, terraced buildings, bungalows, villas and cottages to townhouses, studio flats etc. Many people invest in residential property but do not live there themselves. They usually rent it to generate income. The relationship between the tenant and landlord is more personal since the tenant lives on the property.

Commercial property is any building not used primarily as a residence. They vary from offices, retail spaces, warehouses, factories, shops, restaurants, pubs, and hotels to many others as well. Some owners run their own businesses but many investors lease them to owners of other businesses who would rather rent space than buy, to save on capital for their own business.

Unexpectedly, the pandemic caused a peak in the housing market. As one authority put it, “the sector gave jobs to 551,000 people and generated over 68.6 billion British pounds in turnover in 2021.”

Market trends:

The pandemic also resulted in various trends, with the lockdowns causing people to work online from home. Many people now prefer this method of working and this has increased the demand for more residential properties. Flexible working changes have encouraged many people to relocate. People were looking for larger accommodation to include office space as well, with an outdoor area for relaxation. This is still very popular. Now that “normal” working is resuming and people are returning to offices and work spots, residential accommodation like apartments in cities and urban areas are also in demand. This has resulted in a hike in rent rates.

Supply against Demand: 

House prices in the UK on an average have increased for over nine months in a row. The main cause for this is that there are not enough properties to meet the demand. With the lockdown, construction work was halted which led to an even higher dearth of property. As long as the demand remains high and exceeds the supply, which is likely to continue, the residential property market will prosper and house prices will also increase.

Government schemes:

Government schemes, such as the mortgage guarantee scheme, with a 5% deposit, Rent to Buy (subsidised rent for a set time and then the option to buy the property), First Homes (for new build homes) and Right to Buy (for Council tenants to buy the homes they rent) has also encouraged new buyers to step on to the property ladder.

Competitive market:

Market share concentration is at a low level, which makes residential real estate highly competitive. Due to the lack of supply, large housebuilders have reported a rise in sales. It also means that less availability leads to competition amongst buyers, resulting in higher prices.

Rental market:  

According to an authority, the “UK rental growth had hit a 13 year high and predicted this growth will remain strong with an estimated rise of 4.5% by the end of 2022”. The rental market has always been competitive. Now, renters are looking for the right property in the right area and at the right price. The lack in the supply of properties and the improvement in the employment market will keep the demand high and the rental market robust.

Price growth:

As mentioned earlier, house prices are at a peak. The increase varies in different locations. However, housing in the UK has always been expensive, mainly due to the really high house prices in London. In outer London’s prime areas, where there is still a race for more space, average prices reached a high. With the speculative return of foreign buyers, investment in property is also likely to increase. So are rental rates.


No one can correctly predict what the future will bring. However, for the present, despite inflation and the financial burdens of spiralling expenses, the residential real estate market is as resilient as ever.

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