Real Estate Market Scenario in the United Kingdom

This paper delves into the current state of the real estate market in the United Kingdom, including market volatility and investor perspectives. It also provides insights into the demand and supply of real estate properties. The prevailing market scenario of the real estate sector is the combination of the consumer demand and the supply that the sellers of real estate can not only commit but also provide them remaining abided by the norms and protocols of legalized business endeavors.

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Running head: REAL ESTATE
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Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................3
Current Market Scenario..................................................................................................................3
Market Volatility & Investors Perspectives.....................................................................................5
Conclusion.......................................................................................................................................6
References Harvard 6......................................................................................................................8
Appendix..........................................................................................................................................9

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List of Tables & Figures
Figure 1: Historic residential property transactions (Source: GOV.UK. 2019)..............................3
Figure 2: Fluctuation in the Real Estate Market Overtime..............................................................5
Figure 3: Total UK non-residential property transactions by month (Source: Gov.uk. 2019)........5
Figure 4: Seasonally adjusted residential transactions have remained (Source: GOV.UK. 2019)..5
Figure 5: Residential property transactions year-on-year comparison............................................9
Figure 6: Residential property transactions year-to-date comparison (April January - 2014-15 to
2018-19 financial years)..................................................................................................................9

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Introduction
Real estate deals with the buying and selling of the land, building and other related
physical properties in different countries. The rates at which the real estate properties are being
bought or sold in the United Kingdom and the existing state of business environment of this
sector is the point of interest that this paper have aimed to delve upon (Wu and Tam. 2018).
Current Market Scenario
The prevailing market scenario of the real estate sector is the combination of the
consumer demand and the supply that the sellers of real estate can not only commit but also
provide them remaining abided by the norms and protocols of legalized business endeavors. It is
been seen that there is availability of nearby 7.7 billion square feet area with competitive leasable
space and 4.5 million square feet area that is located in the core places of the country which
requires to be sold in exchange of proper valuation (GOV.UK. 2019). The rates that are found to
prevail is on an average per square feet lies between $ 8.00 and $ 20.00 respectively.
Figure 1: Historic residential property transactions (Source: GOV.UK. 2019).

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It is been seen from the above diagram that the residential transaction regarding the real
estate properties over the time span of 10 years was relatively fluctuating. The variation is
depending upon the perception of the seller to obtain potential buyers as well as the evidence
based perception of the buyers regarding the competitive selling price of the offices, buildings,
lands and other physical properties that may be regarded as the real estate premises. Moreover,
the market analysis reveals that there is a continuous downwards pressure upon the net rents due
to the rise in the operating expenses to maintain the real estate properties in its appropriate form
(Hartmann. 2015). This helps to maintain the real estate properties in a manner where they will
not lose their selling price rather will be appreciated in terms of the value at which they can get
sold to potential buyers (Kurlat and Stroebel. 2015). It is also been seen that investors are
attracted to buy full floor areas and utilize that opportunity to rent them after they have bought.
People have preferences towards stores at the ground floors above the car parking areas and
hence the investors have areas of interest as well as preference in those arrears where their
investment can ensure tem that they will be able to acquire future earnings by renting them after
they buy them (Kopczuk and Munroe. 2015). In fact the real estate should not only possess a
resale value but also will help them to earn their present investment within a certain payback
period. Market research revealed that the current rental rates have achieved this quarter range
between 6 dollars o that of 18 dollars per square feet. The “class A” buildings, in the corer area
of London are found to be predominant class with a supple of 2 million square feet and possess
low rate of vacancy and hence these are the areas of almost fixed earnings. About 15 % to 20 %
of the space by the downtown is being occupied by the insurance and financial sectors viz. the
London Life, TD Canada Trust, etc. (Glaeser et al. 2017). The sustenance of this business can be
trusted as creative digital business are continuously growing in the areas of London followed by

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creating a steady demand regarding the office spaces as well as buildings with amenities that are
suitable for the tenants.
Market Volatility & Investors Perspectives
Based on the urban morphology the demand and supply of the real estate sector varies
overtime. In order to understand the investor’s perspective it is not right to provide a land,
property or building but it is also essential to ensure that the real estate is sufficiently able to
attract the investors both domestically and internationally. The market volatility is thus the
product of the investor’s demand for the real estate products and service which again is the factor
of the facts and figures based on which the real estate sellers is able to attract the investors in a
better manner.
Figure 2: Fluctuation in the Real Estate Market Overtime

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Figure 3: Total UK non-residential property transactions by month (Source: Gov.uk. 2019)
Figure 4: Seasonally adjusted residential transactions have remained (Source: GOV.UK. 2019)
The figures depicts the fact that the changes in the real estate market overtime was
unstable but by the quarter of 2019 it is becoming stable gradually. In order to accomplish this
objective it is very important to anticipate the buyers need and to maintain the real estate
properties in a way that the buyers do not lose their willingness to buy the real estate properties
and hence it is important to maintain them into proper shape (Agarwal, Ben-David and Yao.
2015). The willingness of the buyers as well as the sellers as well as the affordability of the
buyers if become equal or more than the acceptance sales value of the seller only and only ten
any real estate property gets sold out. Moreover, government intervention is highly required in
order to ensure that any of the real estate that are being sold or transacted do not take place in an
illegal way or the contract regarding business with real estate do not occur where the buyer is
better off by worsening off the seller and vice- versa (GOV.UK. 2019). Hence the legal codes of
exchange of real estate properties are executed in a Pareto Optimal manner with the established
norms as per the government of the country. This also attract buyers and sellers to earn

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credibility regarding the real estate business. Real estate is an effective commodity within the
country that raises the national income and in case of United Kingdom it will remain as an
effective tool that raises the gross domestic product of the country if it is able to attract domestic
as well as foreign customers consistently (Cerutti, Dagher and Dell'Ariccia. 2017).
Conclusion
Based on the market value and demand of the properties it is been found that the price of
the real estate properties varies overtime. However, in most of the places it is been found that the
value of real estate appreciates over time. The positive aspect of real estate properties is that it
cannot be taken from one place to another. However, with respect to the macroeconomic factors
of the economy, the demand and supply of the products and services of this sector fluctuates.
Hence, from the overall analysis and the data studied, it can be concluded that the market of real
estate based on its current situation is moderately volatile and in order to ensure that the growth
and development of the real estate sector takes place and the market remain stabilized in the long
run, the aspect of information asymmetry regarding buying and selling of properties should be
monitored effectively.

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References
Agarwal, S., Ben-David, I. and Yao, V., 2015. Collateral valuation and borrower financial
constraints: Evidence from the residential real estate market. Management Science, 61(9),
pp.2220-2240.
Cerutti, E., Dagher, J. and Dell'Ariccia, G., 2017. Housing finance and real-estate booms: A
cross-country perspective. Journal of Housing Economics, 38, pp.1-13.
Glaeser, E., Huang, W., Ma, Y. and Shleifer, A., 2017. A real estate boom with Chinese
characteristics. Journal of Economic Perspectives, 31(1), pp.93-116.
GOV.UK. (2019). Statistics at HMRC. [online] Available at:
https://www.gov.uk/government/organisations/hm-revenue-customs/about/statistics [Accessed
25 Feb. 2019].
Hartmann, P., 2015. Real estate markets and macroprudential policy in Europe. Journal of
Money, Credit and Banking, 47(S1), pp.69-80.
Kopczuk, W. and Munroe, D., 2015. Mansion tax: the effect of transfer taxes on the residential
real estate market. American economic Journal: economic policy, 7(2), pp.214-57.
Kurlat, P. and Stroebel, J., 2015. Testing for information asymmetries in real estate markets. The
Review of Financial Studies, 28(8), pp.2429-2461.
Wu, P.J. and Tam, K.P., 2018, December. Using the ARDL Approach to Explore the Effect of
Chinese Individual Mobility in Australian Residential Real Estate Market. In Third International
Conference on Economic and Business Management (FEBM 2018). Atlantis Press.

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Appendix
Figure 5: Residential property transactions year-on-year comparison
Figure 6: Residential property transactions year-to-date comparison (April January - 2014-15 to 2018-19 financial years)