Impact of COVID-19 on UK Housing Market

This report discusses the changes in average house prices in the UK from 2009-2019 and the economic determinants behind these changes. It also examines the impact of government actions on the housing market during this period. Additionally, it predicts the impact of COVID-19 on the UK housing market.

Contemporary
Business Environment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. How have average house prices in the UK changed over the period from 2009 - 2019?.......1
2. What are the economic determinants of the changes outlined in your answer to Question 1?4
3. How has government action over the period 2009-2019 affected the UK Housing market?..6
4. Predict what would be the impact of COVID-19 on UK Housing Market?............................7
CONCLUSION................................................................................................................................8
REFERENCE................................................................................................................................12

INTRODUCTION
Business environment is defined as task that should be complete by considering internal and
external factors. There are many factors and issues in relation to business are important to
consider at the time of running activities. The managers are playing important role as they
analysis the environment and get information which factor can influence the business. In present
time all the world is facing another issue that is COVID-19 which is serious diseases, killing
many people at one time (Sena, 2020) . This is also an uncontrollable situation which are facing
by people and affecting badly. Due to this situation, all businesses activities are closed, all
transport, real estate and other business are falling down that also affected the country’s
economy. This report is all about housing market and its prices from 2009-2019 that helps to
increase the understanding about what is going on in country and how all can be control. This
report covers discussion about house prices in UK, economic determinant of changes,
government action over the period and last impact of COVID -19 on the housing market are also
considered.
MAIN BODY
The combination of various element and factors that arises in internal and external range for
running of business activities and taking competitive advantages an environment is set up by
government that is business environment. This is full of rule, regulations and policies that are
important to run the activities and maintain the high profitability. For running a business the
management should focuses on such factors that can be affect the business negatively. The types
of business are transportation, real estate, retailers, super market, automobile, IT firm, selling
organisations etc. are required to follow the actions and legislations that help to run and maintain
the high profitability. As all the world is suffering from pandemic situation that impacts on
business badly and reduce the production and profitability in competitive environment.
According to time changing the needs and wants of people are also changing where it is
important to have good knowledge and improve the production house by offering kind of
products and services (Imbrogiano, 2020).
1. How have average house prices in the UK changed over the period from 2009 - 2019?
In UK, it has been seen that the prices of houses are increasing from the year of 2009 as
many people having knowledge about real estate and property who were running their business
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successfully. In business market, real estate is required to follow all regulations which are made
by government so all legal formalities can be provided to customers while buying houses. The
prices of houses are changing from the year of 2007 as that time cost were high due to high
demand and population growth (Lischinsky and Sjölander, 2020).
Figure 1House prices in UK from 2007 to 2019
Source: House prices in UK from 2007 to 2019
From this statics it has defined that in the year of 2007 the average price of house were
1,80,000 GPB which was increased in 2008 by 1,90,000. This graph is showing that in 2009 the
price of house extremely reduced due high mortgage payment, more expenses, economic
recession etc. become the reason of falling business. This was a challenging situation for
contractors, builders, property dealers, suppliers and real estate business that has reduced the
organisational productivity and profitability (House prices in UK from 2007 to 2019). The year
2009 was very crucial time for business concern in which the prices of houses are totally down
which has affected the business negatively (MKurtz and Boone, 2008). The economical
condition of UK reduced and loan from banks become difficult to pay as they were charging
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high interest rates. From the year of 2010 it was started to fluctuate as increases in houses prices
that was 167,469 GPB up to 1,73,427. After the year 2009 the prices of houses was increasing
and are shown in the graph that can help to understand how it has affected the business due to
changing in market situation. In the year of 2017, the houses prices was again reduced than last
year due to brexit that states the businesses which were established and people who were living
in European country had leave at that moment. This reason brought a situation of challenging
economy and reduction in houses prices (Costa and Teare, 1994).
Figure 2House prices changes in UK
The prices of houses are changing annually is shown in above graph as in 2009 the cost
was reduced that is beneficial for customers to buy the properties at low cost for living purpose
and investment purpose. As of the July 2019 the prices of residential properties in UK seen as
lowest annual increased prices since 2012. The average cost of houses increased by 1.1 percent
in 12 month prior to July 2019 (Jabłoński and Jabłoński, 2020).
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2. What are the economic determinants of the changes outlined in your answer to Question 1?
Economic determinants are those element which arises while working and affected the business.
This is important for all businesses to focus on economic activities and managing the good
performance. If the economical condition of economy is good then all activities can be managed
and businesses are operated properly. The economic determinant in relation to changing
environment are as defined :
Political – This factor is related to political and government regulations that are
important to follow while operating the business. This involves tax rates, VAT, political stability,
government stability, trade tariffs etc. In UK, government has changed the regulation for housing
as people should not have more than 2 houses and wealth that has reduced the buying power of
buyers. On the other side, increasing wealth tax rates after the year 2009 has affected the real
estate business which reduced the buying capacity of customers (Caganova, Cambal and
Luptakova 2010).
Economical – This factor is related to economical condition of country that involves
inflation rates, interest rates, loan taken, GDP rates etc. In UK, increasing mortgage rate,
increasing interest rates etc. have affected real estate or housing market negatively as their
expenses are increased and increased the productivity. On the other side, low interest rate and
good economical condition of UK helps to maintain the business of housing market and increase
the productivity and profitability.
Social – This factor is related to changes in social factor such as lifestyle, needs and
wants, customer satisfaction, increasing population etc. which may affect the housing market. In
the year 2017 Bexit occurred which has removed many business, started by other people who are
not from UK. The prices of houses in UK has been increased as people are demand houses due to
increasing population which has affected the business (Choe and Pattnaik, 2007).
Technological - For organisation it is important to focus on new technology and
invention that helps to run the business and attracts the business. In UK, all contractors and
builders have opportunity to use this factor and introduced the virtual reality (VR) that helps to
give model design and structure of houses which can help to attracts the customers and increase
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the profitability. This factor helps to increase the business performance and activities in
contemporary business environment which help to run the business effectively (Dang, Jasovska
and Rammal, 2020).
Legal – This factor is state that business organisation should be follow all legal rules and
regulation which are important to run the business. In UK, it is important for contractors and
builders to provide the equal wages and safety to their workers which helps to retain them in
organisation for long period and get completion of task.
Environment – This is another factor which states that business should be integrate with
environment that can help to make clean environment. In UK, government make regulations for
business concern to keep it clean and healthy by reducing wastages, renewable energy, solar
energy etc. that make strong economy and increase the demand of their products (Niemimaa,
Järveläinen, Heikkilä and Heikkilä 2019).
The economic determinants in changes are as defined:
Changes in needs and wants of people – This determinant states that people are of
different culture and tradition that has different demand in regard of housing market as they buys
houses as per their income level, design and structure that helps to attracts them and make the
buying decisions.
The prices of houses – The economy states the if the prices of houses and products are
relevant and reasonable then they make decision to buy. As shown in task 1 the prices of houses
in the year 2009 was reduced that become challenge for contractors and real estate that helped to
people to buy the houses effectively. A small shift in price of houses affected the business and
bring changes in their economy.
Employment rate – This is main factor in relation to economy which helps customers to
focuses on housing market. In UK, after the year of Brexit employment rate are increased which
helped to maintain the strong economy and happiest to customers? If there is changes in
employment such as reduction then it bec difficult for people to buy the houses and live their life
properly. In UK, many people are skilled who wants jobs and still are unemployment needed to
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work. The changes in economy have affected the business as people get job and buy the products
which they wants that help to maintain the effective changing business environment (Das, 2020).
Therefore, PESTLE analysis and other determinants in relation to business states impacts
pin changes of economy. A small changes can influence customers buying power and housing
market that may affect the performance and activities.
3. How has government action over the period 2009-2019 affected the UK Housing market?
Government is defined as regulating body that works for public by making regulations
and policies for running business and increasing the performance. In question 1 it has defined
that government is playing important role in Housing market as it make regulation, monetary
policy, land registration and other activities are perform by such authority which helps to operate
the business successfully in challenging environment. In the year 2009-2019 government have
taken action as it formulate monetary policy and regulations which are important in housing
market helps to increase the business performance. This is one of the main component in housing
market that states building codes and zoning regulations that states that person who have houses
in UK should be maintain all hygiene and safety standards that can help to operate the business
and increase the customer’s trust. Government has made regulations to buying any property
firstly there is need to get registration and affidavit that helps to become the legal owners. A
houses selling document should be presented in front of registrar and show their structure which
can help to operate the business and managing the activities. Land registration is needed before
any construction which helps to provide the right steps and making the decisions. The another
action is building codes and zoning regulations that means valuation concerns. According to this
regulation a property that already exist should be more valuable than buying new one. This also
generate the cash flow by property can be high enough to compensate for additional construction
cost. In the government action it has mentioned that to evaluate the property before buying and
selling proper so right prices can be taken (Harris and Roach, 2013). .
Government is making the regulation over the period of 2019-2019 in relation to housing
market that helps to operate the business and increase the satisfaction level of customers in UK.
This can be challenge for housing market to follow the government regulations and run the
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business effectively. The government has made regulations for selling the properly after
registration and managing the effectiveness. If economical condition of UK is good and people
are highly aware about their prices and tax rate then they make decisions to buy. In UK, the
Monetary policy committee (MPC) are governing body who have formulated the regulation and
policies in relation to houses that helps to manage the performance and fill the needs of
customers. It has been seen that policies which are made by government in the year from 2009-
2019 are stable for houses prices that are better for stabilization and managing the high
productivity. Without government permission it will be difficult for people and business concern
to buy and sale the houses and make the right judgement (Jabłoński and Jabłoński, 2020).
4. Predict what would be the impact of COVID-19 on UK Housing Market?
As seen above housing market in 2009 was highly reduced due to economical changes,
mortgage property, increasing interest rates and others which has reduced the product9ivity and
profitability in housing market. As all the people in all over world are facing a serious problems
that is COVID-19 that is major issue in business environment which has stopped all businesses
and reduced the profitability. This is also known as corona virus which affected Wuhan city in
china country. This is crucial time which are dealing with people by maintaining precautions
properly (Zehir, Karaboğa and Başar, 2020). In this situation all businesses such as real estate,
transportation, import, export’, textiles, showrooms, temples and many businesses are closed due
to which no earning are generating. Not only UK but also all countries employment rates are
reduced in high range as organisations are started to retrench the employees for the purpose of
cutting cost of their business. This is challenging situation for all people to prevent themselves
and live their life by maintaining working. Businesses who belong to IT sector and technology
are running in existence only as they are giving opportunities to their employees for working
from home and generate the earnings. This pandemic situation has create many issues for people
and businesses such as housing market as it is being reducing. . Very less number of people are
interested to buy the houses and property in this time as they have no income resources which
can be use to generate the income. For buying anything there is need of money and strong
economical position so buying decisions can be taken in market. The death rate in all countries
and states are increasing continuously where people are facing the problems as health
consciousness. It has been seen that this diseases has impacted on housing market badly as
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falling in prices of houses due to changing in economy, unemployment rate, increasing interest
rate etc. that has affected negatively. This is important for all countries to get rid from this virus
so people start to feel good and safe in challenging environment. People are facing low
employment rate which has reduced income level of people that states fallen in economical
condition. This diseases has created a main problem for daily wages workers who are working on
daily basis and getting the earning for living their daily life. They are facing the problems for
daily working as they have no money to spend and working due to this virus (Black, 2009).
This has been predict that COVID-19 would be impacted on housing market negatively as prices
of houses will be fall due to not having money in market. This pandemic situation has bring low
economy and challenges for people to maintain the housing market. People are not working so
they are not interest to buy the houses that shows not effective housing market. After COVID -19
the housing rate will fall 40-50% because this serious situation will up after a long period that
will help to fill the basic needs of people. For housing market, it is needed to reduced the houses
price that can help customer to make the buying decisions. In Market, there are less people who
are interested to buy the houses building etc. that reduced the organisational productivity. Due to
recession and reducing customer’s interest and Brexit situation will reduced the market house in
market (Giang, Binh, Thuy, Ha, and Loan, 2020).
Recommendation
From the above discussion it has recommended that due to recession, increasing interest
rate, mortgage loan and etc. housing market in affecting badly. No people are showing interest in
buying and investing in houses which is reducing the business activities. As shown in 2009 the
housing market has been fallen then after it was started to grow. In the year 2019, due to
COVID-19 this housing market again reduced and needs to be grow.
CONCLUSION
From the report it can be concluded that business environment is focusing on different
factors that are important to run the business. Housing market in 2009 was negati9ve that means
low process of houses and properties then it bring it up. Economic determinants such as changes
in demand, tax rates, recession and others are affecting the housing business. COVID-19 is
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serious diseases which will impacts on housing market negatively as process will go down and
hsale will be reduced.
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Online
House prices in UK from 2007 to 2019. [Online]. Available through:
< https://www.statista.com/statistics/751605/average-house-price-in-the-uk/ >
House prices changes in UK. [Online]. Available through:
< https://www.statista.com/statistics/751619/house-price-change-uk// >
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