Fluctuations in the Housing Market of UK: An Analysis of the Factors and Government Policies

Running head: ECONOMICS FOR BUSINESS
Economics for Business
Name of the Student
Name of the University
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1ECONOMICS FOR BUSINESS
Executive Summary
One of the most prospective sectors in the economy of the United Kingdom, which
has contributed significantly in the economic growth and prosperity of the country over time
is the residential sector of the country. However, the sector has been subjected to huge
dynamics and fluctuations in terms of prices as well as in terms of availabilities, which in
turn had considerable implications on the welfare of the residents of the country. The
fluctuations have been even more visible within the period of 2006 to 2016, with the prices
remaining immensely high in the period prior to the Crisis period of 2008, reducing
drastically with the initiation of the crisis and then again increasing visibly post recovery of
the economy from the recessionary situations. Keeping this into consideration, the report tries
to analyse the factors which have been influencing these dynamics in the housing market of
the country over the concerned period. The report also analyses the schemes and policies
taken by the government of the country in addressing the lack of affordability and availability
in the housing market in the contemporary period and the implications of the same, both
positive as well as negative, on the potential buyers as well as on the overall economic
welfare of the country in the long run.

2ECONOMICS FOR BUSINESS
Table of Contents
Introduction................................................................................................................................3
Residential Sector of UK...........................................................................................................4
Fluctuations in the housing sector of UK...................................................................................5
Factors affecting the prices in the housing market of UK.........................................................7
Period before the Global Financial Crisis of 2007-2008.......................................................7
Crisis Period of 2008..............................................................................................................9
Period post recovery (2012-2016)........................................................................................11
Government policies and measures..........................................................................................13
Implications..........................................................................................................................14
Conclusion................................................................................................................................15
References................................................................................................................................16

3ECONOMICS FOR BUSINESS
Introduction
One of the most developed countries in the contemporary global economic scenario,
which has over decades shown impressive growth traits in almost all the aspects, is the
United Kingdom. Being one of the largest economies under the European Union as well as in
the global framework, the economy ranks among the top ten countries in the world, both in
terms of Nominal GDP as well as in terms of purchasing power parity (Fethi and Katircioglu
2015).
Much of the economic growth of the country can be attributed to the robust
development of different sectors in the economy, especially the industrial as well as the
service sectors in the economy. The country has also established robust trade and business
relations with almost all the economies in Asia, Europe and across the world and has
witnessed immense immigrations from different parts of the world, owing to global economic
phenomena like Globalization, liberalization and transfer of production activities as well as
productive resources across the globe.
These factors have cumulatively contributed to an increase in the demand for
residential assets in the country, which in turn has led to immense development of the
residential sector of the country (Derudder 2012). However, the housing sector of the country
has been subjected to considerable dynamics owing to different domestic as well as
international phenomena, the fluctuations being in terms of prices, affordability as well as
availability. Keeping this into account, the concerned report tries to discuss the different
fluctuations and trends prevailing in the residential industry of United Kingdom, especially
within 2006-2016, thereby trying to analyse the causes behind such fluctuations in the same.
In the last part, the report highlights the policies and strategies taken by the governing