Contemporary Business Environment

This report analyzes the UK housing market from 2009-2019, including evaluation of average changes in housing prices, economic determinants, government actions, and the impact of Covid-19.

Contemporary
Business Environment

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
1 Evaluation of Average changes in housing prices of UK during period of 2009-2019...........3
2 Identification of economic determinate that have lead to changes in price of housing............4
3 Various government action over period of 2009-2019 have impacted over UK housing
market..........................................................................................................................................6
4 Prediction of impact of Covid-19 on UK housing market........................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Contemporary business environment refers to highly competitive market where various
factors keep on changing such as policies of government, economic condition, social preference
and taste or technology. Business need to understand such changes in order to formulate
effective strategies for growth and success of enterprise. Covid-19 is one the uncertain events
that have impacted housing price of UK. This report is analysis of UK housing market that has
changed over period of 2009-2019. It has also discussed about economic determinate and
government action that have affected UK housing market between periods of 2009-2019. At last
the report has explained about impact of Covid -19 on UK housing market.
1 Evaluation of Average changes in housing prices of UK during period of 2009-2019
There are tremendous changes or increase in price of UK housing market despite of
economic and political uncertainty and it have been estimated that it would further rise in future.
Since nine years home prices of UK have increased approximately 38.9% that is on an average
increase from £168,703 to £243,370. Since 2010, from various nation of UK prices of housing
market have rise mostly in England that is 42.4% and London experienced largest regional
growth that is 66.3% as compared to rest of UK. It can be stated that prices of UK house have
increased by 1.1 % in every year before July 2019 thus estimated value is roughly around 216
thousands British Pound. The trend of increasing prices was not just in UK but also with several
European countries such as Ireland, Denmark, Germany and Netherland (Ramey, 2019). It is
expected that prices of housing will tend to increase more in future as due to Brexit government
will refocus on domestic issues. It have been estimated that average prices of UK housing have
been increased by 2.2% to November 2019. Since past three years, south and east of England are
facing slowdown in prices of Houses that is prices of houses have felled down by 0.7%. On the
other hand London shows increase in prices of house by 0.2%. As per November, estimated
prices of UK house is £235,000 that was much more higher than £5,000 in November 2018. It
can also be illustrated that on non seasonal prices of UK housing have increased by 0.4%
whereas in seasonal it rise to 0.6% from October 2019 to November 2019. Various changes in
house prices can be compared on basis of country such as Wales has highest growth in prices of
house that 7.8% on an average £173,000. On the other hand averages price of house in Scotland
showed increased by 3.5% since many years and after October 2019 it was only 1.7% so average
housing price is £155,000. Whereas as compared to average increased in prices of house of

England over years it have been 1.7% that is available at £251,000. Northern Ireland was one of
the cheapest country in UK for individual to make purchase of property as it have estimated
average prices that is £140,000. There are various changes in prices of housing in UK on basis of
region such as England and west Midland show rapid growth in price of housing that is almost
around 4.0% at the same time London show low growth in prices that is only 2.0%. Lowest
annual growth was faced by east of England as prices of house fall by 0.7% since several years.
London was one of the expensive places in terms of making purchase of property as estimated
prices of house on an average are £475,000. Therefore these were all several changes in price of
housing market in UK that have adversely impacted on overall growth and development of
economy and living standard of people (Berrington, Duta and Wakeling, 2017).
2 Identification of economic determinate that have lead to changes in price of housing
Economic determinate such as demand and supply, interest rates, population ,
employment and average disposable income of customers are some of the economic determinate
that have affected prices of housing in UK. Therefore some of economic determinate that has
lead to several changes or increase and decrease in price of average UK housing can be
illustrated as follows:
Affordability: It refers to income level of individual that means people are likely to spend or
make purchase of house in case they have high income level on the other hand resist to make
purchase in case of low income. Since 2010, UK economic is growing at fast pace that have lead
to increase in total demand of house and increase in its prices. At the same time due to Brexit UK
have to suffer from situation of recession that have lead to less employment opportunities and
low disposable income thus demand and prices of house have decreased in 2019 (Hochstenbach,
and Arundel, 2020). Thus, it can be stated that changes in income level of individual have
adverse impacted on prices of UK housing market.
Confidence among consumer: It is another factor or determinate that has impacted upon
changes in price of housing since 2009-2019. There are two factors on which consumer need to
have confidence that is Housing market of UK and future growth and development of economy.
Such as people of UK if expect that there will be rise in prices of housing then they will likes to
make more and more purchase of house in order to enhance their overall wealth. Therefore it
can be stated that in reverse situation people may expected or think that price will decreased such

as in situation of Brexit so they will decided to postponed their purchase to take advantages of
low price purchasing of house.
Interest rates: It also plays major role in influencing price of house, demand of customers to
make purchase of house for better and independent living. Interest rates determined about cost
individual need to pay for mortgage of loan in order to make repayment of loan amount. It can
be stated that majority of UK residents in order to buy house in UK mostly prefer to have
variable mortgage interest rates (Mitton, 2016). Therefore various changes by Bank of England
will directly impacted on interest rates payment thus choice of individual regarding making
purchase of houses. Mortgage payments take most of the disposable income of customers so
there preference changes regarding to make purchased of houses. Such as in 1992, there was
increase in interest rates that is 15% so demand of house have collapsed or decreased leading to
decrease in prices of property. On the other hand in 90’s and 2000 UK have low interest rates
that motivated maximum individual to decided to make purchase of house thus increase in
overall prices of houses. But at the same time with interest rate there are various other factors
that influence price of housing such as in 2008 despite of cut in interest rates to 5% demand of
house have not increased due to low employment and recession.
Population: It can be stated that population of UK is also economic determinate in prices of
housing market as increase in population will lead to more demand of house and increase in
prices of house or vice versa. Number of people and demographic structure both have impact on
pricing of housing such as many individual in UK want to have their independent life that have
lead to increase in demand of house (Lo, 2019). There are various socio, economic and
demographical factors that influence price of housing in UK. Averages family size in UK have
been decreasing that lead to more and more demand of house as individual needs home to live.
Increase in number of divorce case, immigrate from different parts of country to UK for job and
education, most of the children living their home at early stage to have their own life that have
resulted in overall increase in demand of houses.
Availability of finance and mortgage: It stated about number of banks that are willing to give
loan or mortgage to people so that they can take decision to buy houses. Strength of bank to lend
money to customers mostly depend upon inter banks sectors. Therefore, demand of house will
ultimately increases when bank give mortgage or loan with bigger income multiple. There was
credit crushes in UK in 2008 that have resulted in withdrawal of many finance mortgage to

people or fall in total mortgage thus it have become difficult for people to buy house at high
prices which lead to decrease in demand. Banks wants more deposit than lending due to credit
crushes that have created problem for people in making purchases of houses. So, it can be stated
that availability of finance within economic has also major impacted on pricing of UK housing.
Cost of rent: People also prefer to buy homes on basis of various changes in cost of rent of
house in order to avoid extra expense and have separated owned house. Despite of housing crash
and economic slowdown there was increase in cost of rental in UK to 22%. So in such cases
individual tries to put their best efforts to buy house by means of mortgage (Roberts, 2016).
Therefore in UK most of the people wants to own their respective house in order to avoid
expensive rental charges and make use of their household budget in purchase of houses.
Economic growth and real income of individual: It is last factor or economic determinate that
impacted or influence changes in prices of housing from period of 2009-2019. Economic growth
and increase in overall income lead to more expenditure or purchase of house in order to satisfy
their personal requirements. Such as in boom period in UK there was high demand of housing
that contributed in continuous increase in price of housing market. But due to economic
slowdown because of Brexit demand and prices of houses in UK have decreased so it has lead to
change in price of housing market.
Speculation: It can be stated that most of the people does not buy house for their living instead
they make purchased in order to sell other people for earning specific return of capital invested.
Number of investors in house has been increased since recent years that contributed in effective
growth rates in pricing of housing market (Bergman and Foxon, 2018). Therefore there are
tremendous increased in prices of house and rents so investors are planning to invest their capital
in order to get best result or outcome in future time.
3 Various government action over period of 2009-2019 have impacted over UK housing market
Government makes various policies and procedure in order to control and effective
management of housing pricing so that various benefits can be given to house owners. UK
government is highly concerned about limited amount of house because of growing population
and increasing ageing population. Constraints on supply of homes have lead to continuous
increase in prices of house in UK (Dewilde and Ronald, 2017). Due to low elasticity of housing
supply government have formulated various policies and procedure to increase supply of homes
and decrease prices that are growing since 2008. At time of recession number of homes felled by

100000 therefore 250000 house need to be built in order to reduce inflation rate to 1.1%.
Different policies and procedure or actions that are taken by government which have impacted
pricing policies of housing can be illustrated as follows:
Government Subsidies: Government have provide subsidies in order to increase supply of
house within UK so that pricing of housing market can decreased and people get homes at lower
prices. But due to high scarcity of homes and increasing number of population, immigrate and
adults that want to live alone have resulted in rapid increase in overall price of house.
More flexibility in planning: Another action that has been taken by government is flexibility in
various restrictions related to housing market so that more and more people can get benefits of
availability of homes at reasonable prices (Scanlon and Whitehead, 2016). There are number of
restriction in UK so loosening such rules can contributed in more elastic of supply of houses and
decreased in prices so that number of people can have home to live.
Council homes: It can be stated that 80% of homes are built by council homes so local authority
have stop building homes that resulted in overall shortages of place of living for UK citizens.
Therefore government need to make more investment to increase supply of homes.
Reduce tax prices: Government have decided to reduce prices of house by cutting tax and
interest rates for investors that will provide rental facilities at affordable prices so that number of
people can have home to live their life (Kydland, Rupert and Šustek, 2016). Thus, reduction in
tax price for such investors has contributed in increasing supply and decreasing prices of houses.
Monetary policies: Bank of England by increasing overall interest rates of mortgage of homes
can discourage large number of individual to have their separate homes. Increase in rates of
interest in loan resulted in decrease in prices of house and demand thus availability of homes for
people.
Brexit: It was one of the leading policies of government that have resulted in economic
slowdown, temporary increase in unemployment rates and decrease in disposable income of
customers. Britain people have voted to leave European Union to have independent control and
rules that have resulted impacted on economic growth rates thus reduce demand of house in UK
market (Chadha, 2017). Therefore it can be stated that all such policies, action and procedure
taken by government during period of 2009-2019 have resulted in decrease or increase in prices
of houses.

4 Prediction of impact of Covid-19 on UK housing market
Covid -19 has huge impact on economy as well as housing market price as number of
sales of property; rented house has been decreased in UK. It have been noticed that prices of
house have been decreased or fell by 1.7% which was much higher than 11 years of decline.
Government is taking crucial steps in order to support local residents and businessman so that
economic can grow and people can live better lifestyles (McCluskey and et.al., 2016). There has
been significant increase in number of searching for homes as per property websites after covid -
19 as people wants to have their own house to stay safe and healthy for longer period of time.
Various development activities related to building of homes have been ceased due to Covid -19
such as it have been noticed that at a site construction of 1930000 homes in England 79% of
total supply of UK. Most of the investors or land builders have stopped or loss their interest to
undertake activities related to construction of housing because of impact of Covid -19. As huge
of their capital have been blocked by way of investment in building of house thus demand of
house have decreased to some extend. Covid- 19 have lead to economic slowdown and increase
in unemployment rates thus most of the people are not ready to pay high prices or interest rates
to buy house in UK. Most of the older generation in UK have planned to sold their big house and
to shift in small homes and property in order to get specific amount of money so it have paced
towards increase in supply of homes (Hantzsche and Young, 2020). There is fear among people
and investor after lockdown due to Covid -19 that it will resulted tremendously decrease in
housing price growth rates in near future. It have been estimated that there will be fall in price of
housing in UK by 13% till 2020 because of consequence of covid-19. Brexit and Corovirus are
two uncertain event that have impacted on overall interest of different investors to build house
for reselling purpose because of minimum availability of fund. It also estimated that there would
be decreased in price of housing till 2024 by 15% in UK so that people can easily afford homes
to live. Covid -19 is pandemic situation that have resulted in decrease in both supply and demand
of housing in UK as neither people have enough money to purchased nor builder want to
construct more house in order to save their capital from block. It can be stated that covid -19 can
have long term impact on economic, public confidence that may impacted house market
adversely in future (Koch, 2018). It have been expected that people after lockdown will make
released their saving to make investment in real estate or home of their own. So, the situation of
increase decrease in price and demand of house can be rapidly boom after lockdown and

everything will come on track at the same time people will gain confidence to invest their
capital. Covid -19 uncertainty have not just impacted on growth and development of economy
but it have cause financial crises, credit crushes so people of UK may less be willing to make
purchased of house. So, it can be illustrated that housing prices may fall in short run but it will
finally increased due to growth in actual demand of house in UK. People that have more
property and house are likely to sold them in order to get enough money in times of economic
crises for better living (Shankley and Finney, 2020). Thus it has contributed in increasing supply
of house in UK and may lead to decrease in price of house for short period of time. Therefore it
can be stated that Covid -19 have impacted both present and future housing market of UK.
CONCLUSION
It can be concluded that UK marketing house pricing have significant changes during
period of 2009-2019 due to various factors or determinate such as preference of people, interest
rates, disposable income of individual. It can also be concluded that government have taken
carious action or steps in order to control price of housing for benefit of local residents. At last it
can be stated from above analysis that Covid in uncertain events that can impact on pricing of
housing in UK

REFERENCES
Books and Journals
Bergman, N. and Foxon, T .J., 2018. Reorienting Finance Towards Energy Efficiency: The Case
of UK Housing.
Berrington, A., Duta, A. and Wakeling, P., 2017. Youth social citizenship and class inequalities
in transitions to adulthood in the UK.
Chadha, J. S., 2017. Commentary: the economic landscape of the UK. National Institute
Economic Review, 240(1). pp.F4-F13.
Dewilde, C. and Ronald, R. eds., 2017. Housing wealth and welfare. Edward Elgar Publishing.
Hantzsche, A. and Young, G., 2020. Prospects for the UK economy. National Institute Economic
Review, 251. pp.F4-F34.
Hochstenbach, C. and Arundel, R., 2020. Spatial housing market polarisation: National and
urban dynamics of diverging house values. Transactions of the Institute of British
Geographers, 45(2). pp.464-482.
Koch, I., 2018. From welfare to lawfare: environmental suffering, neighbour disputes and the
law in UK social housing. Critique of Anthropology, 38(2). pp.221-235.
Kydland, F. E., Rupert, P. and Šustek, R., 2016. Housing dynamics over the business
cycle. International Economic Review, 57(4). pp.1149-1177.
Lo, C. L., 2019. Urban regeneration and economic sustainability of office market: the case of
Manchester, UK (No. eres2019_195). European Real Estate Society (ERES).
McCluskey, D and et.al., 2016. Commercial leases in the UK regions: business as usual?. Journal
of Corporate Real Estate.
Mitton, L., 2016. The financial crisis as game changer for the UK welfare state. In Challenges to
European welfare systems (pp. 743-765). Springer, Cham.
Ramey, V. A., 2019. Ten years after the financial crisis: What have we learned from the
renaissance in fiscal research?. Journal of Economic Perspectives, 33(2). pp.89-114.
Roberts, A., 2016. Household Debt and the Financialization of Social Reproduction: Theorizing
the UK Housing and Hunger Crises', Risking Capitalism (Research in Political
Economy, Volume 31) (pp. 135-164). Emerald Group Publishing Limited.
Scanlon, K. and Whitehead, C. M., 2016. The profile of UK private landlords. London: Council
of Mortgage Lenders.
Shankley, W. and Finney, N., 2020. Ethnic minorities and housing in Britain. ETHNICITY,
RACE AND INEQUALITY IN THE UK, p.149.