economic

ECONOMICS

TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................1
INTRODUCTION ..........................................................................................................................1
BACKGROUND ............................................................................................................................1
ECONOMIC CONTEXT ................................................................................................................2
ROLE OF GOVERNMENT ...........................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

EXECUTIVE SUMMARY
UK is highly developed economy and attracts people and businesses around the world to
invest in country. Due to high growth opportunities and higher returns people are moving in
country. Housing market that is already facing supply deficit is facing increased demand for
houses. It is creating demand surplus against the supply. This is causing rise in house prices and
also the borrowing capacity leading investors to buy property for let out to have rent income and
capital gains. It has made a boost in housing market causing further demand and rental prices
kept on rising due to increasing population. The steps of government to create housing surplus by
lowering interest rates have not expected results in reducing prices. There has been highest
increase of 7.6% in a year in last four years which is again a concern for the country. It makes
significant contribution in economy and fluctuations in it would affect all the business sectors.
High prices would affect the income and expected returns of the businesses involved in
construction sector as people would start making shifts to other places. Report has discussed the
determinants that are causing the increase in prices.
INTRODUCTION
The housing market is about purchasing, building, letting and refurbishing of the
property. Selling or buying are costliest transactions that people undertake. Market is highly
monitored and regulated by government. Housing prices are influenced by different factors
causing them to fluctuate over different period of times. It also influences other business sectors
as the economy as whole is influenced by the housing market (Zhang and et.al., 2020). Report
will discuss about the rising UK house prices and factors influencing the prices. It would also
discuss the impact of Covid-19 on the housing prices. It will also cover the role of government in
advancing the business growth in economic problem.
BACKGROUND
House prices in an economy are fundamentally the function of demand and supply for the
houses. Underlying demand for the housing is correlated positively with number of houses that
forms and changes in the real income. Demand of housing is negatively correlated with the
interest rates. Impact of the higher demand over house prices and the rents would depend in
increase in the demand related to the changing supply.
It is seen that the housing prices have been increasing constantly with increase in
inflation rates in economy of UK. There have been number of studies which that estimates
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