Contemporary Business Environment

This report analyzes the changes in the average prices of housing property in the UK over the past decade, the economic determinants affecting the housing market, the impact of government actions on housing prices, and the effects of COVID-19 on the UK housing market.

Contemporary Business
Environment
Table of Contents
INTRODUCTION.................................................................................................................................3

MAIN BODY........................................................................................................................................3
1. Change in average prices of housing property changed in a decade..........................................3
2. Economic determinants of the changes in the Housing market......................................................4
3.Government actions affected the housing prices.............................................................................6
4. Impact of COVID-19 on UK housing market................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................11
INTRODUCTION
Business environment is defined as analysing different factors influence the business
of organisation. Business environment is a sum of different internal and external factor
affecting business of organisation. This report will emphasis over how the average prices of

housing market in United Kingdom has changed over the past one decade. How the economic
determinants has impacted over the housing prices in United Kingdom. This report will
further emphasis over the impacts government actions have created over the housing prices in
United Kingdom. Furthermore, report will project the key impacts COVID 19 crisis created
over the housing prices in United Kingdom.
MAIN BODY
1. Change in average prices of housing property changed in a decade
(Tan and et.al., 2018)
The above chart projects the statistics about how the average property prices in Unietd
Kingdom have increased over the period of time. In the year 2019 the average housing prices
in United Kingdom have reached to 21200 marks as compare to 14992.05 marks of 2010.
The comparison projects that the average housing price in United Kingdom has been grown
up at a rapid rate. The prices in 2011 went to 15542.58 marks which is further extending up
to 16197.01 in the year 2012. In the year 2013 the average prices of UK housing market has
gone up to 16784.85 mark which is further increased to 17521.75 in year 2014 (Panagiotidi
and Printzis, 2016). In the year 2015 the prices have reached to 18219.3 mark which is also
further increased to 18707.19 in the year 2016. 2017 was the year when the average housing
prices in United Kingdom have registered at the rate of 19485.39 which also further increased
to 20544.34 in the year 2018 (Agnew and Lyons, 2018). In case of 2019 the average prices
was registered as 21200 which was the maximum of all time. In the year 2020 the average
prices of housing property have decreased due to pandemic of Corona Virus all across the

globe which has created a sudden down fall in the entire market. It can be projected that
except from 2020 the prices of the housing have always seen an increasing trend in United
Kingdom due to many reasons but the demands of the property becomes one of the major
reason behind the constant increment in property prices. Several other reasons as well
inflation that has contently increased the prices of all the properties. Other than that many
other reasons have also noticed like income of peoples in United Kingdom has also increased.
People started earning more which allows them to invest in the hosing property as it is
denoted as the safest technique to invest in long run. Increase in income is one of the major
reasons behind increasing demands in housing properties over United Kingdom real estate
market. All peoples all around the globe lies to invest in the properties as it do not contain
any losses rather in majority of case the investor wounded get a potential return against the
investment he or she has done in the property. The comparison between the prices is totally
denoting the facts that prices are hiking constantly on a very good rate.
2. Economic determinants of the changes in the Housing market
Economic determinants are those factors that measure socioeconomical positioning of
family, neighbourhood financial conditions and societal and cultural factors that promotes
health. It is important to understand for the business because it supports to analyse profit ratio
of business as well as sustainability rate. Economical determinants are disposable income of
people, interest rate, unemployment rate, construction cost, credit and supply of money that
directly impacts on housing market of UK positively and negatively. (Antonakakis and
Floros, 2016) These economic determinants lead vast change in business profitability from
2009 to 2019. In this mean while time, there are various determinants like disposable income,
credit and supply of money etc. increases that improves pricing of housing market. while
other factors like high cost of construction, high unemployment rate etc. brings huge loss in
prices of housing market in the UK. However, housing market influence by the state of the
economy, disposable income, interest rate and flexibility in population size. Economical
determinants impact on housing market is described below:
Economic growth: It is a major economic determinant whereas housing demands are
basically dependent upon disposable income of population (Wang and et.al., 2018). With
high economic growth and improvement in disposable incomes, people enable to invest more
on houses, it denotes that it will improves demand of the houses and declines bargaining
power of people for the house price. Demand of the hoses is properly dependent on income
elastic such as rising incomes of people improves their spending behaviour on houses. As

same concept implement in recession period, falling in disposable income reduces capacity of
spending on houses or they cannot afford to buy luxuries when they loss their job or may fail
to pay their mortgage payments.
Unemployment: It is second economical determinants that also impacts on market housing in
UK. Economical growth in the country is the main reason of unemployment. For example
unemployment rate was increased in 2009 due to fewer opportunity of jobs that causes fewer
people was enabled to afford houses while others are fear of unemployment demotivates
them to enter the property market (Panagiotidis and Printzis, 2016). By and by organization’s
economic growth was increasing due to improves availability of job opportunity that has
decreased unemployment ratio as resultant housing market demand again has increased in
2019. So it can be analysed that unemployment is also a effective economical determinants.
Interest rate: Interest rate is also another economical determinate that is directly
impact the price of monthly mortgage or loan payments. For example when interest rate is
high then automatically increases mortgage payments which cause demand of the house
buying in people will be decreased. Generally high interest rate improves renting price and
makes it more attractive rather than buying. Interest rate gives huge effect if homeowners
have larger and various mortgage payments. For example, in 2011 to 2012, sudden how rise
in interest rate that led huge loss in UK house prices. The reason behind was that most of the
homeowners could not capable to afford the rise in interest rates. But in 2013, UK’s
government took initiative by reducing interest rate that again improves homeowners buying
behaviour that rises UK’s house prices.
Consumer confidence: Confidence is also considered in economic determinants
because it is essential to identify either that people wants to take risk to take out loan
payments. Expectation is important towards the housing market because if people fear to
think that house prices can fall then they will avoid to buy houses (Rubaszek and Rubio,
2019). When people are fully filled with expectation then they like to buy large number of
houses to keep positive thinking that prices of house will not fall. Such confidence improves
spending behaviour of people and improves selling behaviour of housing market in the UK.
UK’s people are more confidante as compared other countries and they prefer to take large
number of houses without concerning about economical crisis. Thus, consumer confidence
also gives huge contribution in housing market. For ex

Mortgage availability: The year of 2009 to 2014 are known as boom years for the
UK’s housing market because in this period most of the banks were very keen to lend loans
to the people. Many banks encourage people to borrow large capital in multiple time or five-
time income from their actual income. In addition, banks provide loan at low deposits i.e.
hundred percent loans. Thus, high availability of mortgages in numerous banks influenced
demands of houses as large number of people was enabled to buy hike price houses. While
other banks were offered credit crunch services that raised funds for lending on the money
markets. it has tightened lending criteria and requires large deposit for purchasing houses.
Due to lending funds in the money market has reduced mortgages availability in the business
market which directly lead huge fall in demands of houses. From past few years like 2016 to
2019, many banks set different platforms of mortgages so that people can borrow money as
per their needs without concerning about interest rates. It denotes that availability of
mortgagees impacts on housing market price. In 2019 UK’s government has decreased 0.5%
interest rate that led lower mortgage payments that also influence demands of houses in
housing market (Sunde and Muzindutsi, 2017).
Brexit is also another reason that lead extensive fall in housing market. for example,
due to Brexit interferences decreases demand of houses in people because Brexit leads
change in policies and currency exchange rates etc. that causes most of the small-scale
business have to face huge economical loss and they requires large investment to sustain in
the business market. But due to high mortgage payments small business owners has lost their
business which improves unemployment rate in UK. It discourages people spending
capabilities on houses. Due to uncertainty in currency and political policies has influenced
prices of housing market is about £215,925 as result fall in demand in people.
3.Government actions affected the housing prices
Government in United Kingdom has been very active to control the housing prices in
United Kingdom. It becomes important from government’s point of view to control the
property prices in United Kingdom to sustain it affordable for the peoples in United
Kingdom.
Taxes and subsidiaries: Government in United Kingdom has provided deduction in taxation
over the purchase of housing property in United Kingdom. This has created positive impacts
over the housing market of United Kingdom. The benefits in taxation have improved the

decision making of peoples planning to buy a housing property in United Kingdom. With the
support of section 24 the tax benefits granted to buyer is provided extra benefits to the buyer
over the purchase of property. It has also played a role in sustaining the property prices in a
limit. Tax deduction is great benefits to the peoples whose income covers under the taxable
income limit as per the income tax law of United Kingdom (Meen, Mihailov and Wang,
2016). Government has also provided subsidiary to all the buyers planning top buy a housing
property in United Kingdom. This is also a key benefit buyers of the housing property are
gaining by buying the property in United Kingdom. These both benefits have impacted over
the investment decisions of peoples as well in property. Now due to subsidiary and tax
benefits peoples like to invest in the housing property in United Kingdom as it has made the
positive impact over the property prices. Due to both the benefits prices of property did not
increased at a aggressive rate so as increased in other part of world.
Maximum and minimum prices: Government in United Kingdom has set the maximum and
minimum prices for housing property. This is the prices which denote the prices of the
property can e be exceeded to a certain limit or can’t be restricted into a certain limit. Seller
of the housing property carries the right to get the minimum price against the housing
property he is aiming to sale. The maximum and minimum prices will differ based on the
location of property. Every location in United Kingdom carries the minimum as well as
maximum price that can be charged by the owner of the property. These prices are changes
every year by year (Tao, 2019). Government played a major role in controlling the prices of
property in United Kingdom with the support of this policy. This rule has allowed them to
take control over the prices of housing property in United Kingdom. It becomes essential for
the government to keep the prices under control so that even the normal human being can
afford the property in United Kingdom. Government considered the fact that home and
shelter is among the basic needs of human being. It becomes essential to control the property
price for better control the standard of living of people in society.
Regulating the market: Government in United Kingdom has regulated the property market
on a continuous basis. Regular modifications have been done by government in property act
of United Kingdom that has supported government to keep the housing property prices under
control. With the support of necessary changes in the property act of United Kingdom
government could make a effective modification to control the property prices. In recent
times government has implemented the maximum and minimum prices for properties in
United Kingdom. This is also an important modification government has done to control the

property prices in United Kingdom (Kuang and Wang, 2018). With the support of this
modification government has supported the normal peoples of United Kingdom to buy
properties in United Kingdom. These regulations have created positive impacts over the
property prices hike in United Kingdom. Regulations are all about controlling the property
market of United Kingdom. All such regulation like tax deduction and subsidiaries has
allowed government to control the property prices in United Kingdom real estate market.
State ownership: As per the regulations of United Kingdom the property comes under the
state ownership in the United Kingdom. The property located in the state will be the owner of
the state. The ownership of property is transferred as the regulation issued by state in United
Kingdom (Dewilde and Ronald, 2017). In case of any specific taxation have been imposed
over the property sale from the side of state that will also be applicable on the property due to
state ownership of property. This is also a key concepts implemented over the real estate
market of United Kingdom.
All the above regulations and government actions has controlled the price increment
over the real estate market of United Kingdom. Government do believe that house is among
the basic need and requirements of the human being. It becomes essential for the humans to
have a safe house as it covers the basic need of human being. Government opposed all these
regulation to support the affordable pricing concepts for the real estate market of United
Kingdom. Over the period of time prices of property has increased in United Kingdom but
the per capita income of people in United Kingdom have increased more than the price hike
in United Kingdom over the housing property.
4. Impact of COVID-19 on UK housing market
There is a great impact on the housing in UK market which is that the people do not
want to shift out. There is a great risk for the housing industry in the country because the
customers do not want to come in contact with anyone. To make this industry start in the
market again is going to take a lot of time because the customers have to know there rights
and it is in their own hands to be sure of their security. There is no business which is taking
place in the country which is a great risk for the growth and there are a lot of employees
which are left from the industry as well. There are a lot of customers who have already
purchased the houses are not being able to give the rents or loans they have taken because
there is an imbalance in the economic stability of the people as well. There are a lot of
changes which have come in the market because of this one disease. There are a lot of

customers are not having sufficient amount to buy their groceries and there are a lot of people
who have lost their employment as well in the country which has to be maintained in the
organization.
The housing employees in the country are being given salary but there is a cut in the
salary as well because of the instable economy of the country as well. The employees do not
have to lose their jobs and they are making sure that there is a better functioning of them in
the market. The industry is planning for a long term impact on it therefore they are taking this
measure. There are a lot of protests which are taking place in the country and it is because of
the lockdown that the people are not getting enough amounts to pay the rents because they
can either survive or pay rents from it (Nikitina and Lapiņa, 2019). The media is also being
supportive of the customers because they understand them but there are a lot of employees
which are there in the organization as well which have to be paid and if they are not paid then
the organization will be forced to leave the people out of the company. The market is already
not being able to function in the country which is why there has to be a better functioning
only then there are operations. The trends in the market is shifting which is why there has to
be a better functioning and the organization will have to make sure that they are taking the
right measures and paying the employees from time to time otherwise the company till lose
on a lot of loyal customers and employees as well. It is very important for the organization to
have a change in the strategy as well so that there is a better functioning and long term
planning.
CONCLUSION
This report has projected about the different aspects related to, price hike in the
property market of United Kingdom. Over the period of time from last one decade prices of
property has reached to next level in the real estate market of United Kingdom. Government
has implemented tax deductions, subsidiaries and other regulations to control the prices hike
of property in United Kingdom. Various reasons like inflation increase in demand increase in
per capita income and so many key reasons that has supported the price hike in the property
market of United Kingdom. Government in United Kingdom has also implemented the
minimum and maximum pricing rule to control the prices of real estate properties in United
Kingdom. Due to COVID 19 the prices of real estate market have reduced as it have affected
over the demand.

REFERENCES
Books and Journals

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