The real estate market refers to the assets made up of properties and the land that they sit on. In the United Kingdom, the real estate market includes buying and selling real estate, renting or leasing real estate, or performing real estate activities on either a contract or fee basis.
The real estate market can be divided into residential and commercial and is a major part of the UK economy. Just like any asset, the housing market is also affected by supply and demand fluctuations. The law of supply and demand dictates the equilibrium price of a property. A low supply of housing inventory may drive prices up, which is what tends to result in bidding wars. A specific property may be in demand by multiple parties who all try to outbid each other by increasing their purchase price offer.
The bidding war ends when the seller accepts one of the offers, which then also removes a unit from the available supply. When there is a high demand for properties in a particular city or state combined with a lack of supply of quality properties, the prices of houses tend to rise.
On the other hand, when a weak economy and an oversupply of properties lead to low or no demand for housing, the prices of houses tend to fall.