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Everybody could use a little spare cash. Whether you sell collectibles or check the latest lottery winning numbers religiously, we all love to make our money grow. But one area that we can’t recommend investing in right now is houses; the housing market has exploded in the UK. And it’s not alone: everything from food to gasoline is also skyrocketing in price. How big are the numbers, how scared should we be, and is there anything we can do about it? Read on for more details.
How Much Has Housing Gone Up?
According to The Guardian, housing in the UK is at the highest that it has been in 17 years. There was a £33,000 increase from March of last year. But even though the prices have gone up, demand has stayed roughly the same. Economists predict a recession following the recent housing bubble, but when that will happen is anybody’s guess.
If the goal of flipping houses is to buy low and sell high, right now is a terrible time to invest in property! Even if you’re not in the market for a new house, however, you aren’t safe from the inflation sweeping the economy.
And You Say It Gets Worse?
Unfortunately, yes. The BBC has mentioned an increase in the price of the “basket of goods”—a list devised by the Office of National Statistics that tracks the prices of hundreds of everyday items. Almost all of these items have gone up due to inflation.
Energy bills have also gone up. The price of natural gas has gone up 53.5% from last year, the price of electricity has increased by an astounding 95.5%, and gasoline prices hit world records in April 2022. Even if you can afford to buy a house in this market, it may cost more than expected to live in it!
The biggest reason for this increase in prices is the war in Ukraine. Everything from bread to gasoline is affected. Let’s break that down so that we can better understand why everything from crackers to houses will cost a lot more very, very soon.
Britain gets a chunk of its oil from Russia. As of this writing, oil and natural gas are both used to power many of the things in the aforementioned houses. Russia knows that the bulk of Europe is dependent on its energy, so they feel relatively safe attacking Ukraine. The UK is currently turning to Norway, the United States, and other sources for oil, as well as investing more in nuclear power, but it will be a slow transition.
On a related note, Russia also has a lot of metal exports. This affects the cans surrounding your canned foods and drinks, car production, and anything else that uses common metals such as nickel, zinc, tin, and aluminium.
Conversely, Europe gets a lot of its grain from Ukraine (it almost rhymes, if that helps you remember). Ukraine exports approximately 25% of the world’s wheat, as well as many products derived from sunflowers, such as seeds and oil. The country has also recently added corn to its pantry of exports. Russia is currently trying to stop all of these products from crossing the border.
As of this writing, Europe is in a resource war. Everybody, including the UK, is paying the price.
What Can We Do About It?
Unfortunately, British citizens cannot do much about these high prices. The war in Ukraine is largely beyond our control. While the banks can try to stifle inflation by raising interest rates, that might not do as much as the banks would hope. Perhaps the soundest suggestion would be to increase the minimum wage to keep up with the rising costs.
We are going to finish this article by answering the questions from earlier. How big are the inflation numbers? Very big, into the tens of thousands of pounds. How scared should we be? While we aren’t in any immediate danger in the UK, our wallets are about to get a lot thinner, whether or not we wish to buy a house. What can we do about it? Unfortunately, not much—yet.