How will a rise in gas prices affect housing?
In recent weeks, the price of gas has increased significantly. Due to the surge in wholesale prices and a supply shortage, many households across the UK will have to pay more for their energy.
What is the energy crisis?
According to the data from Oil & Gas UK, the cost of gas for suppliers has risen by 250% since the start of the year, with a 70% increase since August. This has put an enormous amount of pressure on suppliers, leading to several small and large firms to go bust.
Why are gas prices going up?
There are several reasons as to why gas prices are increasing. As Europe starts to enter winter, the demand for gas will be at its highest. Especially from colder countries like the UK, who rely on gas to heat their homes.
The surge of prices in the UK is a reflection of the increase in gas prices globally. After recovering from a pandemic, countries are rebuilding their economies, but this has led to a gas industry with a decreased capacity. Less liquified natural gas is reaching Europe due to a high demand from Asia.
In the UK, maintenance projects that were scheduled in 2020 were rescheduled to 2021. For the first 3 months of 2021, the gas that was sourced from the UK’s providers made up to a quarter of the UK’s gas supply. The UK has become exposed to global energy price swings, more than two thirds of demand for natural gas had to be accomplished through imports.
How will this affect UK households?
Over 22 million residents are connected to the gas grid. In 2020, 38% of gas supply for the UK was used to heat up households. This means that the impact of the rise in gas prices will be widespread.
For the average home, gas bills are predicted to go up to £135 a year, and some homes might end up losing their current energy supplier. With energy contracts having a fixed term price for 12 months, many residents are left feeling as though they have no control. Furthermore, if a person’s contract is shortly due to end, they will face changing their contract to a more expensive one in future.
The property industry is likely to take a hit from the rise in gas prices. Many housing providers will face issues with regards to consumer confidence; increased gas prices could affect how people buy and rent their homes.
Although there is not specific data that shows the relationship between increased gas prices and home sales, residents will be more conscious of their living costs increasing and it’s likely to make an impact on their housing decisions.
Depending on the type of contract your residents are on, price increases are already going to be implemented for the 15 million homes in the UK from 1 October.
Ofgem have been criticised for the price rise, though they have energy price cap in place. Although an energy price cap is one of the better deals in the market, what could make it better? Lengthy contracts give customers less flexibility and this applies to various utilities, including broadband. At ClearFibre, we are committed to keeping our prices low, providing high end services whilst still offering our customers the same flexibility for which other providers demand a lengthy commitment.
Ceyda Tabak is client executive at ClearFibre, part of the Telcom Group. Please get in touch: firstname.lastname@example.org
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