Impact of Covid-19 on UK Housing Market

This report discusses the impact of Covid-19 on the housing market in the UK. It covers the changes in average prices, economic determinants, government actions, and the overall effects of the pandemic on the industry.

CONTEMPORARY
BUSINESS ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAINBODY...................................................................................................................................3
1. Change in average prices of housing property changed over 2009-2019................................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 housing market of UK........................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment are the factors which have a great influence on the internal and
external factors of the organization. These factors have to be understood and accordingly the
organization must make their further decisions. The report consists of pricing of housing market
in United Kingdom and that factors which are impacting this industry from growing further.
There are a lot of government policies which have changed and the companies must analyse
them and then make their decisions accordingly. Due to Covid-19 there is a lot of impact on
housing market of United Kingdom which would also be discussed in the further report.
MAINBODY
1. Change in average prices of housing property changed over 2009-2019
The average property prices in United Kingdom have increased over the years. As of
2019 the average housing prices had reached 21200 marks as compared to 14992.05 which was
the mark of 2010. The project rate has grown and set up high in the market of United Kingdom.
As of 2011 the marks were 15542.58 which were increased to 16197.01 by the year 2012. In
2013 the average price was 16784.85 marks of housing market in UK which increased to
17521.75 by 2014 (Sinha and Foscht, 2016). In 2015 the prices of housing market UK were
marked 18219.3 and that also increased to 18707.19 by 2016. In 2017 the pricing was 19485.39
marks and by 2018 the prices were 20544.34. And then in 2019 the average prices were 21200
which is the maximum of all time. It was due to Coid-19 that the prices of housing market in UK
fell all of a sudden because there is a great impact of Covid-19 in the country. The economic
factors of the organization and the country are not stable which is why there is a drastic change
which is visible. There are a lot of trends and measures which have changed over years and they
also have to be improved so that there is a better functioning of the industry in the market. There
have to be more technologies and technical changes which is required in the organization so that
the company will be able to expand and make a place for themselves in the market once again.
There are a lot of factors which are the reason of inflation in the country because of which the
company is getting affected (Black, 2019). The housing market will have to take technique and
better measures for the safety of the population and there is a great loss which the company is
having regarding employees as well. The pricing of the property are increasing because there is a
hiking for the profits since the company is not being able to pay the employees right since the

customers are limited in this field. There are a lot of people who invest in properties because this
industry ever gets a loss but currently this business is not running good and the people are having
to face a great loss which is not good for a long run (Kendzia and Björck, A., 2018). This sudden
change is all due to pandemic of Covid-19 which has taken place in 2020 and the property
industry is not going great because of which the company is having a lot of loss. There are
properties which are being given out to the customers for a very low price because they are not
able to get cash flow in the company because of which the employees are suffering and the
company has a good set of employees working in the organization which cannot be let free
because of this factor.
2. Economic determinants of the changes in the housing market
Economic determinants are the elements which understand the socio economic position
of society, culture, family and neighbourhood. It is very important for the businesses which are
functioning in the market to understand the condition of the economic flow so that they can price
their products in the market accordingly which is a great factor for the organization. There are a
lot of factors which have to be understood like the interest rate, unemployment rate, credit and
supply money, profit ratio people, etc (Soundarya, 2016). There was a growth in the economic
aspect and there were factors which supported these growths in the market as well which would
be discussed in the further report. Housing market provides the best for the customers so that
they can have their own house or lifestyle they want to create for themselves which is the aim of
the organization but there are a lot of factors which are influencing and impacting on this
industry as follows. Economic growth
The income of the population is low because of a lot of policies which have changes which is
why the company is going to take time to be able to grow in the market. The population will
have to have a good income only then they will be ready to spend it in this industry (Erl, Khattak
and Buhler, 2016). The income of the customers are the dependent pricing factor of this industry
and if the income falls then the organization will also have to reduce the prices of luxury housing
which is going to be a loss. There are a lot of luxury houses which will be left unsold because of
the income level of the people in the country and they will not be able to have comfortable and
improved lifestyles for themselves.

 Consumer confidence
Confidence is also one of the determinants in economic because the customers also have to
have the confidence in themselves so that they will be able to take loans from the banks. The
banks want the loans interest and amount to be paid from time to time and if the customer is
unable to then there are a lot of problems which the organization can face (Atiku, 2018). It is
very important for the customer to have a positive thinking for the prices and the decisions they
are taking which is going to be helpful for them and have a stable and comfortable life in the
future. Interest rate
This is a direct factor which has made an impact on the housing market because the loans
which the people took were not being able to be paid back on time. The interest rates were too
high and the government did not say anything regarding this factor but the banks had interest
rates set high. It was in 2013 that the government reduced the interest rate for the benefit of the
customers and the lifestyle of the population of the country (Tamunomiebi and John-Eke, 2020).
There was a sudden rise in 2011 and 2012 of the interest rate which again made the sales of
housing market reduce and there was a decrease but after the government took the initiative in
this field the organization grows up very quickly. Unemployment
This is an economic determinant which has impacted the housing market majorly in United
Kingdom. This is the main reason why the organization has not been able to grow effectively
from so many years. For example in 2009 there were less job opportunities which were present
in the country which is why the customers did not want to invest a large amount in this field but
just wanted a comfortable and low housing for themselves. The people were demotivated and
they did not find more jobs and were doing over hours and double jobs but still they were not
getting the right pay (Schaltegger and Burritt, 2017). The unemployment rate in the country had
increased due to which the demands of housing also reduced and the currency’s value also
increased so this was another factor which made a great impact on the housing market. Mortgage availability
It was from 2009 to 2014 that housing market was flourishing in the country because the
banks were also supporting this idea and the customers were being given loans for this suppose.
The banks provided the customers with large number of loans even five times the income of the

customers which given to them. There are a lot of customers who want to have a house of their
choice which are not in affording limits but it is because of the loan facility which the banks
provide this can be achieved by the customers. The loans factors had increased the housing
market demands higher than usual which were a great factor for the company. There were a lot
of banks from 2016 to 2019 which provided the customers with loans without them worrying
about the interest rates so that there would be a better lifestyle of the people. It was in 2019 that
the UK government reduced the interest rates by 0.5% for the customers so that the demands of
housing in market and the customers are satisfied (Bitkowska, 2019). There are a lot of criteria
and requirements which have to be provided by the customers in the company so that they will
be given loans but the housing they need for their lifestyle will be provided to them on time.
Brexit also had a major impact on the housing market and the sales fell because of this
reason. There was a change in currency change and policies because of which a lot of
unemployment rates increased and the banks were not being able to provide the right loans to the
customers as well. The small scale businesses had a great economic imbalance and so did the
overall market in United Kingdom. These factors make the customers get demotivated to opt for
the house they need but just sacrifice on their dream house and take alternative options to save
money. It was around £215,925 fall of demand in the market which was a great loss for the
housing market in the country.
3. Government actions affected the housing prices
The government of United Kingdom has been actively involved in these factors so that
there is a balance and the customers are also going to be satisfied. The pricing of the housing
market is controlled for the people and it is according to as follows.
 Maximum and minimum prices
It is essential for the government to set the minimum and maximum prices for the properties
in the country which the government of UK has done. There are limits which the housing market
cannot cross to make profits and there have to be right pricing for the seller of the house as well.
The charges are changed each year which have to be followed by this industry so that they can
have a successful and efficient working in the market (Carayannis and et.al., 2017). This is done
for the normal people of the country so that they have their rights in the country as well and have
a good and healthy lifestyle of their own.

 State ownership
As per the policies and regulations of the country the properties come under state ownership
which is that the person who is from that state can only own that property otherwise no other
state people can own it. The state has to give permission to other people to own the property and
on taxation specific then the state can take decisions upon.
 Taxes and subsidiaries
The taxations have reduced over years so that there is a better reach of the population. The
people have to have the benefit to be able to take their dream property so that they are satisfied
and the government also has to think for the best of the population and not their personal best
(Crnjac Milić, Pavić and Mandić, 2020). There is a requirement of a lot of investment of the
people which is why taxation for the people or the interest rate for them had to be reduced so that
there is a better functioning. The properties sales are going to increase because of this factor
because the customers are not ready to put in their income at such a rate and taxes but now they
will be attracted to this industry which is a great factor.
 Regulating the market
There are modifications and improvement which the government of the country is doing for
the people so that they can own their own properties and feel satisfied. There are a lot of rights
and property acts which have been changed over time so that there is going to be better pricing
for them and the customers can also afford them. There are a lot of positive impact which these
factors have made in the property act which is a great factor for the company and the regulation
as well.
The government must try and fulfil the needs of the people and property or housing is a
basic need of the people which should be given to them (Mcdonnell and Sikander, A., 2017). It is
very important because the human have their rights and they deserve safety and security by the
government. The prices of housing market are increasing rapidly which have to be controlled so
that the organization will be able to have better hike of pricing and UK will be able to provide
their people better affordable and comfortable lifestyle.
4. Impact of Covid-19 on housing market of UK
There are a lot of people who keep shifting because they want a change in life or they
want to have their dream house. From 2020 the pandemic Covid-19 has changed this factor for

the people and the housing market in United Kingdom is also getting affected because of this
factor. There are a lot of risks which are present and the government is also not supporting the
people population because this situation cannot be controlled by the government but the people
will have to be careful themselves (Bansal and et.al., 2018). Government has put out safety
instructions and other factors which are important for the people to know so that there is a better
functioning. The company has lost a lot of employees in the organization which were trained and
skilled in this industry. It is because the organization has not been able to produce the right
income over 2020 which is why they were not being able to pay the employees and due to which
few left on their own and few were asked to leave because of this factor. The market is not
having any strong cash slow and even if there is then it is because of the online businesses which
are getting in currency in the country.
The customers who are there in this housing market also are not being able to pay the full
rent or loans which they have taken and the government has allowed them to do so because there
is no source of income. There is a great imbalance which is visible globally which is why the
company will not be able to get in more customers also because of the lockdown which is taking
place so frequently by the government. People are protesting for loan and rent exemptions
because they do not have sufficient money for getting grocery and how are they suppose to pay
the rent when the market is not functioning (Bianchi, 2017). Housing market is planning to start
off again but there are a lot of measures which will have to be taken according to the policies
which the government of UK has come up with. There are a lot of safety and health measures
which the company will have to follow so that the customers are safe and the employees as well.
There are a lot of trends and demands of the customers which are going to change after this
lockdown is over in the world and it is very essential for housing market to be able to follow
them because getting the market share back up is going to be difficult.
CONCLUSION
There are a lot of factors which are affecting the organization from functioning
effectively in the market for which the organizations in the market will have to take strict actions
for. The government can be helpful if they understand the need of the population and the policies
have to be made for the people so that there is going to be a better employment and inflation can
fall. The pricing of organizations are dependent on this factor itself and for real estate’s there

have to be strict measures which will have to be taken by the government. There are a lot of
people who want to have a quality and healthy lifestyle for themselves but it is because of the
factors which are present in the market there are a lot of reduction in the profit margins.
Currently Coid-19 has been the major factor which has been affecting the economic conditions
of the entire world.

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