Economics for Business UK House Prices and Inflation – It is extremely important to understand the reasons behind the steep rise in house prices in the UK. Different economists and analysts have figured out various reasons and cause behind a huge increase in house prices in the UK. According to Nanda et al., (2021), the demand for homes by the people in the UK is not being matched with the supply and this is the fundamental reason behind an upsurge in house prices. Moreover, the sales of the houses in the UK have been fast in the past 3-to 4 years and have eroded the supply of the home for sale. It is evident from the below figure that the number of houses for sale with each estate agent in the UK tremendously decreased from 2020 to 2021. The sales agents have failed to fulfill the demand for houses.

Increases the demand for houses but the shortage of houses supply has created tension for the consumers and also for the housing market. In the future, it is expected that the house prices in the UK will decrease because the post-Covid situation is better, the construction work has been restored and the supply of houses can be increased in a short period. Thus, when the supply will increase then the demands of more buyers will be fulfilled and the houses will no longer remain a scarce resource, therefore, the chances of a decrease in prices are obvious.