Impact of COVID-19 on UK Housing Market

This report discusses the impact of COVID-19 on the housing market in the UK. It explores the changes in house prices from 2009 to 2019, the economic determinants of these changes, the government's actions during this period, and predicts the impact of COVID-19 on the housing market. The report provides insights into the factors affecting house prices and the future outlook for the UK housing market.

HND IN BUSINESS MANAGEMENT
(SALES MANAGEMENT)

Table of Contents
INTRODUCTION...........................................................................................................................3
1. How have average house prices in the UK changed over the period from 2009 - 2019?.......3
Q2. What are the economic determinants of the changes outlined?............................................4
3. Discuss about the government action over the period 2009-2019 affected the UK housing
market..........................................................................................................................................6
4. Predict that impact of COVID-19 on UK housing market......................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Housing market can be defined as a Marketplace where activities of buying and selling of
houses take place. Housing market in words one of the biggest non economic Investments. This
report will discuss about housing market of UK. UK housing market and its prices have
increased since past few years and report will discuss about changes in price of houses in UK.
Later the report will also discuss about economic determinants because of which price have
changed in UK. Economic determinants can be defined as forces of demand and supply and
some other factors affecting buying and selling of the house. Government also play important
role in regulating housing market and this report we discuss about actions of Government and
their impact on housing market of UK. As for now the world is facing the crisis because of
covid-19 this report will also discuss about impact of covid-19 on housing market of UK.
1. How have average house prices in the UK changed over the period from 2009 - 2019?
Inflation of houses helps to assess the rate of properties taken in the UK with a substantial
amount of rise or fall. It has a acronym HPI which stands for house price inflation. It work as a
joint venture by the registry of HM land, registers of Scotland, services for land and property of
Northern Ireland and National Statistics (Cuevas, 2018).
In July 2019 the country noticed a lowest increase in the prices of property since the year
2012. It is believed that on an average the price of a house goes up by almost 1 per cent in a year.
As per the estimates taken out the figure was around two hundred sixteen thousand British
pounds. The aspect of increase in prices for houses is not just limited to UK it is exclusive in
other countries of Europe too. According to the index of inflation it was from 2013 when the
prices of houses started increasing in the country (Nascimento Neto and Salinas, 2019). Even
after Brexit it will not stop rising it will increase with substantial amounts.
The average increase in prices of houses was from 0.9 per cent and from the last few
years it has been observed that the growth in the prices of housing in UK has slowed down which
has specifically taken place in the South and East of England. Among all it was London who
noticed a lowest rate of growth as there prices came down by 3.1 per cent (Jarvis and et.al.,
2020). It has been falling since the March of 2018. The average price of a house in UK was £

230,000 which is £ 2,000 more than the last year (Jarvis and et.al., 2020). If assessment is done
on the basis of non season of business then in one year it was increased by 0.7 per cent.
At the time of season the rate of one year growth between 2018 and 19 was by 0.1 per
cent. Talking about Wales the rate of houses grew from about 4.4 per cent and the average price
of housing there is £ 164,000 (Jarvis and et.al., 2020). Average rate of prices is decreasing in
London for the last 16 months and it is being compared with the year of 2008 and 2009 at the
time of economic crisis. The fall in the rate of prices is being compared with the fall in the rate of
2019 and 2009 which was 5.2 per cent and 17.9 per cent. It has been assessed that prices of the
houses are falling down because it was not adjusted well on the basis of season or peak time of
business which is creating poor demand of houses. London still has the most no. of expensive
properties which are left to be sold in the market (Malek, Sarin and Jaworski, 2018).
Q2. What are the economic determinants of the changes outlined?
Economic determinants of changes in prices of in UK are divided into two parts (Mariadas,
Abdullah and Abdullah, 2019). These are demand side factors and supply side factors.
Demands side factors affecting changes in price
Demand is one of the most important factors that affect price of a product. Law of demand state
that increase in in demand of the product subsequently increase price of the product. This applies
to demand of houses in UK as well. Factors associated with this are-
Population
In context of demand this is one of the most important factors as the population increase
it increases demand for the house subsequently it increases prices of the house in UK. From past
UK have witnessed increase in population and this increased demand for houses in UK.
Income
Income is another factor that affects demand of the houses. This means that when income
of population of a country increases they are more likely to buy a house of their own. This
increase is demand and price of the houses in UK (Badarinza and Ramadorai, 2018). From 2009
onwards UK also have witnessed increase in its Gross Domestic Product which increases income

of the people. When income gets increased people are more likely to buy their own house and
thus increased demand for the house.
Price of other products
There is no substitute for the house but when it comes to other product and substitute and
compliments in house. The substitute can be house on rent for house on lease rather than own
house. In this context when price of rent and lease are hi people are more likely to buy their own
house. Complement in house can be other required product and services and their availability
around the house. This will increase the demand for house. For example in case a workplace is
near a residential area in such situation demand for houses in that area will be high. Subsequently
this will increase the price of houses in that area.
Preference
This is another important determinant of demand of houses. This is linked with consumer
behaviour this means that when people of a country prefer to have their own house rather than
living in a rented or leased place (Zainon and et.al., 2017). Demand for houses in that country or
area will be high. On the other hand, when people do not prefer to have their own house the
demand of houses in country will be less.
Future price expectation
This means that when prices in future expected to increase demand for the houses in that
time will increase. On the other hand when expected price in future is decrease in price the
demand will reduce and it will increase the demand in future.
Supply side factors affecting changes in price
Supply is another economic determinant of changes in price of houses in UK. Law of supply
states that when other factors are constant increase in price will lead to increase supply of the
product. The same applies to supply for houses in UK. Factors of supply are-
Price of factors of production

This is one of the most important determinants of the prices of house. Price of factors of
production determines the cost of product and supply of the product. Inlet and affordable price of
factors of production increases the supply of product (Zheng and Dong, 2018). This means that
when production in construction of a house in UK incurs affordable cost due to affordable price
of factors of production. Adequate and over supply of houses will keep prices constant and
affordable. On the other hand when price of factors of production are high this will increase the
cost of the house. Subsequently this will affect the supply and supply will reduce.
Number of Suppliers
This is important factor linked with supply of the product. In UK when numbers of
suppliers are high this will affect the price of the houses positively for the buyers. This means
that reduces monopolistic situation and this also creates possibility of bargaining for buyers. This
is because when number of suppliers is high buyer will not remain dependant on one supplier for
the buying of the house. Suppliers in context of houses can be considered as parties involved in
buying and selling of the house. Suppliers when are less in number this reduces power of buyers
and they are required to consider the prices offered by the suppliers. This will affect the price
negatively for the buyers.
Expected price in future
This is the law of supply that when prices increase supply of the product increase. This
means in case prices of the house are likely to increase in future for that given time supply of the
houses will reduce (Hilber and Vermeulen, 2016). This means suppliers and owners of the house
will not buy their house. In other situation when prices of the houses are likely to reduce in the
future this will increase the supply the houses. Suppliers will actively sell their houses.
In context of UK on the basis of above discussed factors price of the houses has
constantly increased.
3. Discuss about the government action over the period 2009-2019 affected the UK housing
market.
In 2009, The British house prices that has first to their annual decline since at least 2002.
According to media, it has rapidly increasingly the price in London whereas they actually faced

the issues related the price down approximately 2.5% (Connell, Martin and St Denny, 2019).
Perhaps, The London housing prices are considered the most challenging issues in term of
discussion United Kingdom. Furthermore, it also extent this is because to fact housing prices
which have already trebled. In this way, landlords are gaining more wealth whenever they have
left with impossible task. Therefore, it is trying for buying the better house (Nascimento Neto
and Salinas, 2019).
Since, 1929 the entire wall street has been crashed so that they also increased the worst
financial crisis. The rate of unemployment, failing banks, credit crunch and other enterprise
which led the economy during recession (Jarvis and et.al., 2020). Before it has developed the
crises the situation of national economy so that there are huge amount of money flowing.
Moreover, there are various banks provide the better funding and dealing of 2009 came
about when bank failed to gather or collect amount of money (Nascimento Neto and Salinas,
2019). Therefore, it will be reduced their lending which automatically collapse of large banks in
UK marketplace. Ultimately, the overall result may be effected the customer but it become
difficult to obtain money from banks. In UK, large number of population has started to rent a
house rather than buying (Jarvis and et.al., 2020). In this way, it will reduce the demand for
housing result or outcome in prices that were failing.
Factors that affecting the house prices in UK
Demand side factor
It plays important role in identifying the significant house prices. If the demand is higher
than other supply housing cost which automatically increases. Another way, if demand for house
is lower than supply price will reduce (Nascimento Neto and Salinas, 2019). In United Kingdom,
New housing society development is generally low and also compare with demand.
 Economic growth: it has increased the economic growth which easily diminishing
unemployment which disposable income meaning people can spend more money on
buying a house (Jarvis and et.al., 2020).
 Future price expectation: When many people look forward to failing their house price in
2008. Therefore, it may give major confidence to people whereas they are selling or
cashing in their capital gains (Jarvis and et.al., 2020). Another way, it is mainly
diminishing the price which will motivate or encourage land owner.
Supply side factors

It is another important factor that directly effect on the housing price in UK market. it has
been decreased the supply because it increases housing prices, especially in long-term
development.
 Market reaction: There are large number of people observed that housing process
increases and expect to keep raise cost (Nascimento Neto and Salinas, 2019). In this way,
large number of people will buy their house. In marketplace, it is high rate which are
willing to lend mortgages with large income multiples.
Government legislation and intervention in identifying interest rate
Monetary policy committee and England bank to setup the specific interest rate in UK. It
was completely independently from the government. The primary aim is to keep inflation as
close to target and possible (Brazer and Daryanto, 2019). In case of inflation is low of high level,
the bank governor has to write letter of certain explanation to canceller. According to property
market legislation changes 2019, which providing the better facilities of landlord to buy their
house within effective prices or cost.
4. Predict that impact of COVID-19 on UK housing market.
In UK, government has stepped up it’s the current action plan which delay due to spread of
coronavirus. For few months ago, the leadership impasses that have been considerations as
dominant subject across the world. Nowadays, COVID-19 that could create majorly challenging
situation or condition (Jarvis and et.al., 2020). Government initiative to set the global stock
market on their steepest downwards trajectory in decades. According to report, it has been shown
that coronavirus little effect on the property within marketplace. It is carried out the transaction
of generate high total value within past quarter.
It is clear predication that multiple families faced the issues due to economic cycle. The
entire UK market is becoming considered as fundamental sector in the economy (Jarvis and
et.al., 2020). The entire UK saw house price increases but it was strongest in London.
Furthermore, there are many people take advantage of borrowing house in cheaper prices,
predicting that 2% of hike would come in 2021 April (Nelson and Osman, 2020). It also
increased the price/ cost of houses in UK. Furthermore, it also comparing the effect of
coronavirus to other uncertainty Brexit that surrounding. It also useful for understanding the
concept and how they will effect in the future. The predication is based on the current situation
which causes some short term wobble in the marketplace. Afterward, it continuously increases

long-term house price since 2016 (Jarvis and et.al., 2020). Most of people involved in the
housing market with long-term opinion but there are some hesitant homebuyers which always
moving towards the property investor. In this way, it is reflected across the large number of
house prices and recorded detail in term of house costs, transactions.
Apart from that it may predict the effect of COVID -19 which may be increased the
unemployment and directly linked with the demand as well as supply factors. For Example-
unemployment has been risen in the current period and likely to go upwards (Nascimento Neto
and Salinas, 2019). In UK, there are large number of people which will drop income so that it
also decreased the demand for houses. In this way, people could suffer financial crisis due to
corona virus, which could slow their individual transactions.
CONCLUSION
From above discussion, it has summarised about the average house prices in the UK
which has changed over the time. Furthermore, it can be determined that COVID-19 effects on
the future in context of unemployment, decreases price cost of houses in UK.

REFERENCES
Books and Journals
Badarinza, C. and Ramadorai, T., 2018. Home away from home? Foreign demand and London
house prices. Journal of Financial Economics. 130(3). pp.532-555.
Brazer, F.X.J. and Daryanto, W.M., 2019. Comparative Study: Financial Performance of
Indonesia State-Owned Enterprises in Construction and Property Industry for the Period
of 2009-2018. International Journal of Business, Economics and Law. 19(1). pp.1-17.
Connell, A., Martin, S. and St Denny, E., 2019. Can meso-governments use metagovernance
tools to tackle complex policy problems?. Policy & Politics. 47(3). pp.437-454.
Cuevas, J.M., 2018. The transformation of professional selling: Implications for leading the
modern sales organization. Industrial Marketing Management, 69, pp.198-208.
Hilber, C.A. and Vermeulen, W., 2016. The impact of supply constraints on house prices in
England. The Economic Journal,. 126(591). pp.358-405.
Jarvis, C.I. and et.al., 2020. Quantifying the impact of physical distance measures on the
transmission of COVID-19 in the UK. BMC medicine. 18. pp.1-10.
Malek, S.L., Sarin, S. and Jaworski, B.J., 2018. Sales management control systems: review,
synthesis, and directions for future exploration. Journal of Personal Selling & Sales
Management, 38(1), pp.30-55.
Mariadas, P.A., Abdullah, H. and Abdullah, N., 2019. FACTORS AFFECTING PURCHASING
DECISION OF HOUSES IN THE URBAN RESIDENTIAL PROPERTY MARKET
IN KLANG VALLEY, MALAYSIA. e-Bangi. 16(4).
Nascimento Neto, P. and Salinas Arreortua, L., 2019. Financialization of housing policies in
Latin America: a comparative perspective of Brazil and Mexico. Housing Studies. pp.1-
28.
Nelson, W. and Osman, M., 2020. Sociological and psychological insights behind predicted
changes as a result of COVID-19.
Zainon, N and et.al., 2017. Factors affecting the demand of affordable housing among the
middle-income groups in Klang Valley Malaysia. Journal of Design and Built
Environment, pp.1-10.
Zheng, X. and Dong, F., 2018. Factors Affecting the Price of Second-Hand Housing in First-Tier
Cities: Empirical Analysis Based on Panel Data. In ICCREM 2018: Analysis of Real
Estate and the Construction Industry (pp. 143-153). Reston, VA: American Society of
Civil Engineers.