How does the retail market affect the housing market?
What does buying a new television have to do with the price of houses? On the face of it, very little. But in the complex world of economics, pretty much everything is related. Because it’s not just about buying a new TV, it’s also about how many places you can choose to make your purchase from and what kind of price you’ll get (is it more or less than 12 months ago, for example). The retail and housing markets are linked, with various factors meaning that one can be indicative of trends in the other.
For example, towns with a thriving retail sector tend to have higher house prices. That’s because a thriving shopping industry means more jobs, more available capital and more opportunity. And where there’s opportunity, there’s demand. Take Norwich, for example. A bustling city centre with ample employment opportunities in the retail sector means the city draws investment and capital from outside. This adds to the overall prosperity of the town, resulting in house prices going up as it’s a more desirable place to live.
Of course, there are nuances and subtleties involved, including the kind of shops that exist and whether current retail trends are going up or down, but in general, a healthy retail industry is good news for house prices.
Then there’s the impact of retail at a more theoretical level. Over the last few years, the retail sector has been growing, which in turn has been reflected by a growth in house prices. Now, as the figures for retail level off, so too does the housing market. A slow down in spending on consumer goods suggests less disposable income and more caution, which reflects similar trends in the property market. However, while the two are linked, there are no hard and fast rules. At the moment, although retail sales are falling off, record low numbers of available properties in the UK means that demand is high, and so are prices.
So it seems that while retail and property can reflect general trends in each other, they don’t always have a direct influence. Retail can be an indicator of the property market and vice versa, and the two are linked, but you certainly wouldn’t bet your house on it.
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