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Business Economics Assignment Solution pdf

   

Added on  2021-04-19

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Political Science
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Running head: ECONOMICS FOR BUSINESS Economics for BusinessName of the StudentName of the UniversityAuthor Note
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1ECONOMICS FOR BUSINESS Executive SummaryThe housing sector of the United Kingdom has been one of the eminent sectorscontributing robustly to the economic growth of the country and also getting facilitated by thesame. Over the years, this sector has experienced significant expansion owing to the increase inthe population of the country resulting in a higher demand. However, the price levels of theresidential assets in the United Kingdom have been subjected to considerable amount offluctuations, with the same being more within the time period of 2006 to 2016. However, in thesecond half of the total time span the trend of the price growth has been more or less positive.Keeping this into consideration, the report tries to analyze the different factors behind thedynamics in the price levels of the residential assets of the country. It also tries to analyze thedifferent policies and schemes which have been implemented by the government of the country,in order to facilitate the first time buyers in the residential asset market of the country and tries tologically interpret the impacts of the schemes on the price levels and overall economic welfare ofthe residents of the country.
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2ECONOMICS FOR BUSINESS Table of ContentsExecutive Summary.........................................................................................................................1Introduction......................................................................................................................................3Housing Sector of the United Kingdom: Overview........................................................................4Dynamics in the price levels of residential assets in UK.................................................................5Factors determining the price levels of housing assets in the United Kingdom..............................6Factors affecting house prices before Financial Crisis of 2008:..................................................7Period of Recession and Stagnation............................................................................................9Factors affecting house prices in UK post stagnation period (2013-2016)...............................11Impact of Government Schemes....................................................................................................14Conclusion.....................................................................................................................................16References......................................................................................................................................18
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3ECONOMICS FOR BUSINESS Introduction The United Kingdom has over the years, developed into one of the most highlydeveloped economies in the global scenario with considerable market orientation in theeconomy. Being the sixth largest economy in the world in terms of the nominal GDP as well asthe ninth-largest in terms of the purchasing power parity, the country has shown impressivegrowth trends in all the aspects of growth (Capie and Webber 2013). The United Kingdom is thesecond largest economy in the European Union, with respect to the size of the economy as wellas the with respect to the industrial and commercial growth the country has experienced over theyears. Of the different sectors in the economy of the country, the one which has experiencedimmense dynamics and fluctuations over the decades is the housing sector of the country. Withthe increase in the boom in the industrial sector of the country, the economic prosperity of thepopulation of the country increased substantially, which in turn also increased the number ofpeople migrating in the country over the years. This upward pressure in the population andincome generation in the country contributed considerably in building up the housing sector ofthe country (Ngai and Tenreyro 2014). However, the housing sector of the United Kingdom has experienced immensefluctuations in the last few decades, which can be attributed to the different domestic as well asglobal incidents, which in turn left lasting impression on the demand and supply situations in thehousing market of the country. The implications of these incidents have been more negative thanpositive, especially post the financial crisis of 2008, which created immense negativerepercussion on the economy of the country as a whole and on the housing sector in particular
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4ECONOMICS FOR BUSINESS (Wilcox and Perry 2014). Keeping this into consideration, the report tries to analyze thedynamics in the price levels of the housing sector of the country, in the time span of 2006 to2016 and also tries to discuss the factors working behind the dynamics of the same. It also triesto analyze the implications of the different policies and initiatives taken by the government of thecountry in order to stabilize the demand supply scenario and also to maximize the overall welfareof the residents of the country, in terms of availability and affordability in the residentialinvestment sector of the same. Housing Sector of the United Kingdom: Overview The housing industry in the United Kingdom, as discussed above, has been one of theprimary industries which has been facilitated by the economic prosperity of the country and hasalso contributed in the economic growth of the country (Aron et al. 2012). This can be assertedwith the help of the following figure, which shows the sector wise contribution to the servicesector productivity growth of the United Kingdom from 2010 to 2014: Figure 1: Contribution of different sectors in the productivity growth of the service sectorof UK (2010-2014)
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5ECONOMICS FOR BUSINESS (Source: Gov.uk, 2018)As is evident from the above figure, the real estate sector (of which the housing industryforms the most crucial part) has contributed significantly in the productivity growth of theeconomy of the country over the last few years. However, within the time period of 2006 and2016, the housing industry has of the United Kingdom has experienced considerable fluctuationsand dynamics which have also been reflected in the dynamics of the price levels of theresidential assets of the country (Nuuter, Lill and Tupenaite 2015). Dynamics in the price levels of residential assets in UK To measure the dynamics in the price levels of the housing assets of a country, the mostcommonly used measure is the House Price Index (HPI). The HPI of a country or region usuallyshows the changes in the prices of single family residences (taken as a unit of measurement inthe housing market) in that particular market with time. An increase in the HPI indicates towardsan increase in the values of the residences of the concerned place and vice versa (Sá 2015).Taking this into consideration, the HPI of the residential market of the United Kingdom, from2006 to 2016, can be observed as follows: Figure 2: The House Price Index of United Kingdom (2006-2016)
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