Evaluating Internal and External Business Environment

This report evaluates the internal and external business environment, focusing on the changes in average prices of housing property in the UK, economic determinants of the change in the housing market, and the impact of government actions and COVID-19 on the UK housing market.

evaluating internal and
external business
environment

Table of Contents
INTRODUCTION.................................................................................................................................3
MAINBODY.........................................................................................................................................3
1. Changes in average prices of housing property changed in decades..........................................3
2. Economic determinants of the change in the Housing Market.......................................................4
3.Impact of government actions over housing prices in UK..............................................................7
4. Impact of COVID-19 on UK housing market................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................11

INTRODUCTION
Business environment is a sum of internal and external factors that put an impact over
the business outcomes of organisation. This report is based on the case study on housing
prices in UK. Over the last one decade how the housing prices in UK has changed.
Comparative analysis over the average housing prices in UK will be done in this project.
Economic determinant will also analyse in this report to assess the impact over the housing
prices in UK. What are the impacts government actions has put over the housing prices in UK
will also further analyse in this report. Furthermore report will also assess the effects of
COVID 19 over the housing prices in UK.
MAINBODY
1. Changes in average prices of housing property changed in decades
(Tanand et.al., 2018)
From the above graph can be analysed that how prices of housing market in UK have
improved from the year of 2010 to 2019. The average housing prices of UK have increased
21200 marks in 2019 as compared in the year of 2010 around 14992.05 marks. While in the
year of 2011 house price is went around 15542.58 marks that was further externed upto
16197.91 marks. With this comparison project can be estimated that average housing price of
market has been grown rapidly over the period in UK. For example,the year of 2013 average
price of housing has increased up to 16784.85 marks which is extended around 17521.75 in
2014 (Agnello, Castroand Sousa, 2018). As same in the year of 2015 whereas average house

wentto 18219.3 mark which is further reached to 18707.19 in the year of 2016. The year of
2017 were proved boom year for the housing market because it has reached up to 19485.39
mark which were quite high as compared other passed years. Later on, it is further extended
to 20544.34in 2018. In the year of 2019 average house price was enhanced up to 21200
marks which were multiple time maximum as compared other years. The year of 2020 is
known as worst year for UK’s housing market because average housing market prices have
declined. The reason behind is that outbreaking of corona virus pandemic across the world
which has led sudden huge financial loss in whole market.So it can be interpreted through the
statistics of housing property graph that UK’s population have high demand of house which
is one of the reason behind the ongoing increment in pricing of property over the period
except the year of 2020. There are several other reasons like inflation is another reason that
have enhanced the prices of properties. Disposable income of people is also considered one
of the most important reasonthat also influenced housing price in UK (Sissonsand
Houston2019). For example, people get good increment in their salary or income that
improves spending behaviour of them. So, they start to invest huge capital on properties of
houses that also has improved pricing of houses in the housing market. Currently all over
countries people prefer to take risk to invest in the properties to keep hope thatthey get
potential benefits in returnsagainst investment which they have invested on properties. The
comparison between the year of 2009 to 2019 is indicated that prices of houses
wereincreasingconstantly on effective rate.
2. Economic determinants of the change in the Housing Market
Societal, cultural and financial condition etc. are considered as economical
determinants which supports to measure socio-economical positioning of individuals, family
and neighbourhood. These economical determinates give huge contribution in promoting
heath of people effectively. It is very improvement for the House Market to understand
economical determinants of each country then this sector can gain high profit as compared
other sectors. There are some example of economical determinates such as disposable income
of people, interest rate, construction cost, unemployment rate and credit and supply of money
which directly effect on Housing Market positively and negatively (Alkali Sipan and Razali,
2018).From 2009 to 2019, economic determinants have led vast change in Housing Market’s
profitability, performance and operations. For example,disposable income, credit and supply
money etc. increase pricing of housing market. There are some other factors like high
unemployment rate, cost of construction etc. have brought heavy loss in pricing of

UK’shousing market. Generally, price of the Housing Market improves when disposable
income of people is high and lowerinterest rate of financial institutions. Impact of economical
determinateon the price of Housing Market are mentioned below:
Economic growth: It is considered one of the main economic determinantsamong
others which directly impact on pricing of housing market. For example,when disposable
income of population is strong that automatically improves demands of housing in housing
market because people are highly capable to invest their more funds on houses. With this fact
it can be understood that when demand of house become high that directly declines
bargaining power of customers for the hike price of house. However,demands of house is
properly based on income elasticity i.e. improving disposable income. When people have
good disposable income that improves spending behaviour on the house. As same hypothesis
is applied in recession time such as when people’s disposable income decreases or loss job or
may possible to fail paying mortgage payments that directly impact on their purchasing
behaviour because they do not have such income which can invest on buying of luxury
houses.
Unemployment rate: It is another economicaldeterminantthat also affect housing
market in the UK. Country’s economic growth is properly dependent of employment ratio
(Ansell and Adler, 2019). For example, in 2009 employment ratiowas too less due to less
availability of job opportunity which caused most of the people wereunable to afford
housesand others who were potential had fear of job loss or unemployment that demotivated
them to invest in housing market. So, economic growth of UK was too weak in 2009. This
issue became major issues for the UK’s government so they gave response on this situation
by releasing large number of job vacancies for the people so that unemployment issue
resolve. Due to high presence of job opportunities have increased interest of individuals to
grab job opportunity and improves their lifestyle. By and by employment ratio was increasing
which improves demands of housing market in them.Currently UK become financially strong
country among other developed countries. Thus,housing market has become one of the most
emerging market among other top markets till 2019. So, it can be examined that
unemployment ratio in country is also an effective economic determinant.
Interest rate: This determinant impacts on the price of monthly mortgage effectively
such as when interest rate of mortgage is high then people avoids to take loanthat
automatically impact on demands of housing market. However, high interest rate increases

prices of rented houses that makes it attractive instead of buying.Meanwhile 2011 to 2012,
there were various property dealing organization in the Housing Market which faced financial
loss due to sudden how increment in interest rate because most of the small-scale
propertydealers were failed to pay mortgage payments with high interest rates. That’s why
UK’s government declared to reduce interest rate of mortgage payments in 2013
(Augustyniak and et.al., 2018). This announcement again improved buying behaviour of
homeowners whch directly enhanced prices of UK’s housing market.
Mortgage availability: Mortgage availability in UK’s market is another considerable
economic determinant because they play improvement role in improving spending behaviour
of homeowners.The years of 2009 to 2014 are considered flourishingyears for the UK’s
Housing market. the reason behind is that there were number of bankswhich were keening to
offerloansto the people as much as they require. So, lots of banksinfluences UK’s population
to lend large capital in multiple times from their actual income through advertisements. Apart
from this Mortgagesoffers loan on low deposit means hundred percent loans which inspires
homeowners to lend large capitals four to five times. Thus, extensive availability of
mortgages has increased demands of houses in the housing market while property dealers got
opportunity to generate high profit margin on each house in 2013 (Milesand Monro, 2019).
There were other banks that provided credit crunch services which raised funds to lend on the
money markets. The credit crunch services has tightenedlending criteria and needs huge
deposit to buy houses. Such process reduced availability of Mortgages in it’s busines market
that directly led fall in demanding of house among homeowners. In this situation UK’s
government took initiatives to improve mortgages availability such as they decreased 0.5%
interest rate which decreased mortgage payments. While the years of 2016 to 2019, there
were various banks which creates different platforms of financial services so that customers
can lend money accordingly their requirements without worrying about interest rates.
Consumer Confidence: Consumer confidence is also included in economic
determinants. The reason behind is that it is important to determine that people attitude such
as they like to take risk of buying houses on loan payments or avoid to buy house on lend
payments (Hamnettand Reades, 2019). So, expectation is more crucial in the housing market
because when people are filled with more expectation then they prefer to take risk by buying
large number of houses to keep hope that they will get high financial benefit. In other case,
when people have nature to avoid risk then they do not like to buy with this fear like house
prices can be fall out. So, confidence is considered major determinants of housing market

which influence people to buy large number of houses on risk. UK’s population are quite
confident and hopeful as compared other countries population, so they like to take risk in the
form of buying large number of houses without fearing about financial crisis.
3.Impact of government actions over housing prices in UK
Government in United Kingdom has always been concerned towards controlling the
housing prices in United Kingdom. It is important to control the prices based on the per
capita income of UK so that proper shelters to all peoples based in UK can be served.
Different steps government has also taken to control these prices in UK. All the steps can be
summarises in following points.
Taxes and subsidiaries: Government in United Kingdom followed the tax deduction policy
to control the housing prices of UK. This policy of government created positive impacts over
controlling the housing prices. This step taken by government has motivated to all peoples in
UK to buy properties in UK. With the implication of section 24 the tax benefits granted to all
buyer willing to purchase in United Kingdom (Reeves, Levin and Ueda, 2016). This step of
government has increased the demands of housing properties in UK. Tax deduction always
creates positive impact over the mindset of peoples in order to buy assets. Government also
serves subsidies to all the individual plans to purchase property in UK. Tax and subsidiary
benefits impacts over the decision making of all investors looking for investment in UK and
it also influence the decision making of all business persons looking for opening up new
ventures or expand the business in UK. All these factors have increased the property prices
due to increase in demands of property in UK. This step of government has also controlled
the prices at some extent but it has significantly increased the property prices also due to
increase in demand.
Maximum and minimum prices: Government in United Kingdom follow practice to set the
maximum and minimum prices for housing property. Minimum rate denote the minimum
purchase price buyer needs to pay and all sellers or property dealers has specific right to offer
property at this price. Maximum price denoted the figure which can be maximum chargeable
in any case irrespective to any demand of a particular property (Chekh and Vinnyk, 2017).
On the basis of different factors like location, demand, average property price in such
location, per capita income of peoples in UK and many other factors that has influenced the
property prices. The maximum and minimum prices will differ based on the location of
property. Every location in United Kingdom carries the minimum as well as maximum price

that can be charged by the owner of the property. Both these prices have increased over the
year irrespective of any control of government over the property prices in UK. Apart from the
increasing trend in property prices due to these steps and actions of government at some level
government have been capable to control the prices of property in UK.
Regulating the market: Government in United Kingdom has also regulated the property
market on a regular basis. Regulations are also modified time to time based on the demands
of the market. Necessary modification in property prices has allowed government to control
the property trade in UK at larger extent. Regulatory compliances allows government to keep
they eye over every property trade. This drives government to check that weather the
property trade is conducting based on the rules and regulation or not (Beynon-Davies, 2020).
These regulations have created positive impacts over the property prices hike in United
Kingdom. Regulations are aimed to control the property market of United Kingdom.
Regulation of government like tax deduction and subsidiaries has significantly impacted the
property trade in UK.
State ownership: In UK every property comes under the state ownership. The property
located in whichever state will be the owner of such property. In UK even the state carries
specific right to make any regulation due to ownership. State has its own regulation which
also needs to get fulfilled in order to conduct the property trade in UK (Köhler, 2020). This
step of government by giving the ownership to states has also controlled the prices at some
extent apart from increasing demands of property in UK. This supported government to
implement minimum and maximum prices of property.
All the above points have denoted different actions and steps taken by government to
control the property prices in UK. This is becomes mandatory for government to have a
control over the prices so that irrespective to any income group all peoples in UK can afford a
shelter for the family. Maximum and minimum price regulation opposed by government is
among the major steps behind controlling the property prices in UK.
4. Impact of COVID-19 on UK housing market
COCID 19 Pandemic has significantly impacted the entire business environment
across the globe. Due to these pandemic prices has decreased in UK of all the properties due
to less demand of property. The incident has badly heat the income base of people all across
the globe. Many industries have already shut its operations. The individuals who have already
purchased the property just before the COVID 19 are not been able to pay the interest or

repay the housing loans. The whole situation of COVID 19 has immensely suffered to middle
class and lower middle class backgrounds of peoples all across the globe (Mani, 2020). The
income of such people has blocked due to unemployment. The pandemic has increased the
level of poverty in UK. All the industries along with real estate are suffering from the low
demands in market. Peoples become more restricted to do any serious investment. The
market has witnessed the complete instability due to the casualties in UK. It can be projected
that there is a possibility that the situation might get some time to get back to normal as the
normal situation will take time to come UK.
After the incident of COVID 19 demands have significantly touched to its lowest rate in UK.
The property prices in both industrial segment and residential segment have lost its earlier
values. No investment is getting registered after the COVID 19 in UK. Major investments are
postponed by industries and entrepreneurs to expand the business in UK. The biggest
influence COVID 19 has created due to unemployment. Peoples have loosed the jobs market
has completely diminished and many industries have loosed the growth rate. All these
situations are raised due to lockdown in the country. The growth rate registered earlier could
go down completely. Companies do not even able to meet up its expenses after the situation.
This is predicted that it might take another one or two year for the market to get into its
normal pace. In UK income background of peoples are very good which have supported them
to survive in this pandemic crisis somehow (Nam, Lee and Lee, 2019). This made them
realise to think before doing any expense. All these aspects have reduced the property
demands in UK after COVID 19. The situation of COVID 19 has also raised opportunity for
high income background peoples or for upper economic class to invest in property market.
This is a good time to invest as the property prices are low. This factor of COVID 19 has
created some impacts in UK and many upper economic class peoples have looked up for
investments in properties. This has keeps the property prices at certain level. The market
could also fluctuate due to this aspect of COVID 19. Apart from this it can be projected that
the pandemic has negative affected the property market UK. Investments are getting lower in
the crisis.
CONCLUSION
This report has projected the analysis of the property prices in UK. It can be projected
that many steps of government like minimum and maximum price fixation, tax benefits and
subsidiaries and other steps have created a positive impacts over controlling the property

prices in UK. Over the last one decade the prices of property has increased immensely due to
increasing trends of property demands in UK. The pandemic of COVID 19 has changed the
position of market immensely. It has reduced the demands of all the sector involve in
business environment. The property prices after the COVID crisis has reduced which has
given opportunity to upper economic background peoples to invest in residential properties to
gain the advantages of this crisis. This can be predicted that it will take some time to back the
market at a normal pace.

REFERENCES
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