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The UK Housing Market: Resilience Amidst Rising Interest Rates

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With May’s increase in the Bank of England's base interest rate to 4.5%, there is growing speculation about whether the UK housing market bubble will finally burst. However, despite the current challenges, the housing market in the UK has shown remarkable resilience in the face of previous uncertainties, such as the Brexit vote in 2016. In this blog post, we will explore the factors that contribute to the stability of the UK housing market, even amidst a cost of living crisis, higher interest rates, and soaring inflation. We will discuss the housing shortage, the robust legal system, and the lessons learned from the 2008 financial crisis that make the UK housing market an attractive and worthwhile investment for overseas buyers, including British expats and foreign investors. 

The Shortage of Housing in the UK

One of the primary factors supporting the stability of the UK housing market is the chronic shortage of housing. Each year, approximately 300,000 new homes are needed to keep up with the demand from the growing population. This demand-supply imbalance creates a sustained need for housing, which helps maintain property values and supports market stability. Even in the face of economic fluctuations, the fundamental need for housing remains strong, making it a resilient market for long-term investment. 

The Robust Legal System and Investor-Friendly Policies

The UK housing market benefits from a well-established legal system that safeguards the rights of property owners and investors. With one of the oldest and most practiced legal systems in place, property owners can have confidence in the protection of their assets. Additionally, the UK offers a favourable tenancy and landlord system, providing security for investors. These factors contribute to a favourable investment environment, attracting both domestic and international investors who value stability and legal protections. 

Sensible Lending Practices and Risk Underwriting

The lessons learned from the 2008 financial crisis have led to improved affordability and risk underwriting practices in the UK housing market. Lenders now adhere to stricter lending criteria, ensuring that borrowers can afford their mortgage repayments. This prudent approach to lending reduces the risk of overleveraging and promotes sustainable homeownership. For overseas buyers, these lending practices provide confidence in the market's stability and ensure responsible borrowing decisions. 

Attractiveness to Overseas Buyers

Despite the recent increase in interest rates, the UK housing market continues to attract interest from overseas buyers, including British expats and foreign investors. The combination of a housing shortage, a robust legal system, and sensible lending practices make the UK an appealing long-term investment market. International buyers recognize the potential for capital appreciation and steady rental income, even in the face of economic challenges. As a result, International Mortgage Solutions (IMS) has observed sustained interest from overseas buyers, highlighting the market's resilience and attractiveness. 


While the recent rise in interest rates sparks concerns about the stability of the UK housing market, various factors contribute to its resilience. The chronic housing shortage, a robust legal system, sensible lending practices, and lessons learned from past crises all contribute to the market's stability and attractiveness to overseas buyers. Despite the higher interest rates, the UK housing market remains a valuable long-term investment option. At IMS, we continue to witness sustained interest from expats and foreign investors who recognize the inherent strengths of the market. For those seeking stable and promising investment opportunities, the UK housing market proves to be a worthy choice.