UK Housing Market: Economic Determinants and COVID-19 Impact

This report delves into the UK housing market, examining the fluctuations in average house prices from 2009 to 2019. It identifies key economic determinants such as mortgage rates, supply and demand, income, interest rates, unemployment, economic growth, and consumer confidence that influence housing prices. The report also analyzes the effects of government actions during this period, including policies aimed at increasing housing supply and addressing affordability. Furthermore, it predicts the potential impact of COVID-19 on the UK housing market, considering factors like economic downturn, changes in consumer behavior, and shifts in investment patterns. The analysis covers the impact of the pandemic on the market, providing insights into the challenges and opportunities facing the housing sector. The report concludes with recommendations for policymakers and stakeholders to navigate the evolving housing landscape.

Report

ABSTRACT
In present time most of the countries are facing problem of COVID-19 that impact on
economy in direct manner. In context of UK, the housing market fall down and various factors
that impact on the in direct manner. These variables are impact on the housing market and
market goes down. From the year 2009 to 2019 various changes are coming in this sector and
government also taken some action that impact on this sector. The COVID-19 disease how to
impact on the whole market especially housing market in negative manner.

Contents
ABSTRACT................................................................................................................................................2
INTRODUCTION.......................................................................................................................................5
MAIN BODY..............................................................................................................................................5
1. How have average house prices in the UK changed over the period from 2009 to 2019.....................5
2. What are the economic determinates of the changes............................................................................7
3. How has government action over the period 2009-2019 affected the UK housing market?...............10
4. Predict what would be the impact of COVID – 19 on UK housing market........................................11
RECOMMENDATIONS...........................................................................................................................12
CONCLUSION.........................................................................................................................................13
REFERENCES..........................................................................................................................................14

INTRODUCTION
The housing market pertains to the housing affordability, generally in a given nation or
area. A main feature of the housing market is housing listed prices and housing market rate.
Property market implies a system of dealers seeking to invest properties and a matching buyer
system able to buy residences (Tsai, 2018). This report based on the average prices of UK
housing market that fluctuate in different years. This report contains 2009 to 2019 changes in
housing market, determinates, impact of COVID-19.
MAIN BODY
1. How have average house prices in the UK changed over the period from 2009 to 2019
The 2010s have been the least effective century since the 1990s for house price inflation,
early study is revealing. House prices rose 33 per cent in the 2010s, while the average property
fell 21 per cent in valuation in the 1990s, as per Nationwide statistics. The new house price
statistics released by HM Land Registry on GOV.UK for November 2019 indicate that property
prices in the United Kingdom rose by 2.2 percent in the year until November 2019, from 1.3
percent in the year until October 2019. In the UK, housing prices grew by 0.9 per cent in the year
until June 2019, steady in may 2019. There's been a huge decline in UK real wage growth during
the last 3 years, led primarily by a downturn in England's east and south. The smallest yearly
increase came in London, where rates fell to June 2019 by 2.7 per cent across the year, smaller
than the 3.1 per cent decline in May 2019. Every other couple of weeks since March 2018,
average housing prices in London have now fallen throughout the year.
With such an estimate of 157.2 thousand British pounds, the smallest costs for residences
in the UK were seen at the start of 2009. The average property price went up every other time
since January 2013. Since about February 2020 the economy actually stood, the average
household income in the UK was 230.3 thousand British pounds. Among both 2013 and 2014,
the largest rise in property prices since 2007 was reported, when property values rose by nearly
nine %.

On average, since December 2019, house prices have dropped by 1.1 per cent. There was an
estimated rise in prices of 1.3 per cent, which made the average British assets worth
£231,185. The 2010s have been the worst period since before the 1990s for home price increase,
recent research is showing. Residential Prices have risen 33 per cent in the 2010s, whereas the
average house price fell 21 per cent in valuation in the 1990s, as per Nationwide statistics. The
newest property price figures released by HM local authority on GOV.UK for November 2019
show that housing prices in the United Kingdom rose by 2.2 percent in the year until November
2019, from 1.3 percent in the year until October 2019 (Easthope, Stone and Cheshire, 2018).

As of July 2019, United Kingdom (UK) housing prices witnessed their smallest yearly rise since
2012. A home in the UK's expected cost grew by 1.1 per cent in the 12 months leading up to July
2019, hitting an approximate value of around 216 thousand British pounds in the second quarter.
The movement towards higher house prices isn't limited to the UK. Because once trying to
compare the RHPI residential real estate of many other euro nations (consumer prices in absolute
dollars, e.g. rectified for inflation), residences in the UK, Ireland, Germany, Denmark and the
Netherlands have become more affordable as of 2013.
2. What are the economic determinates of the changes
Numerous things influence house prices, including such mortgage rates, supply and
market demand. If demand exceeds supply, it is probable residence costs will continue. The UK
boasts some of currently the highest average home values. There are many alternatives for this
involving mandatory purchase requisitions if homeowners permit their premises to stay vacant
and vacant for 6 months or longer – these premises will then be given access at market segment
rentals to individuals on accommodation waiting times. The home values are determined by the

market. If demand rises (swing to the right) or if production starts to fall (move to the left), house
prices will rise in balance. Likewise, the steady state rate will drop if wages fall or if production
increases. So, in the 2000s, the home values grow so high, but fall in 2008. The reasons for this
lie mainly in changing house prices (Murie, 2018).
The long-term rise in property prices is exacerbated by property prices that outstrip
production. It has been approximated * that 175,000 more houses and apartments per year must
be formulated to meet the long term threshold of property prices. As noted earlier, new
developments are involved in just about 5 percent of property purchases. There are many
numerous factors which are described in the following which have impacted housing demand:
Income: It was time for increasingly increasing sales at the 2007 pleading. The economy was
beginning to experience a "boom" in economic theory. Most of the citizens started to invest their
excess income on rent; even first build a property or move to a better one. Numerous folks
assumed their earnings will also keep growing and were therefore ready to spread monetarily in
the near term by having an expensive residence, assured their monthly repayments would
become more cost effective surrounded by white time. By comparison, there were cycles of
downturn in 2008/09, with increasing unemployment and then either declining, or wages
increasing far more gradually. Individuals were far less fortunate to have the opportunity to pay
massive volumes.
Interest rate deduction: No approximation of the effects of changes in home values caused by
falling lending rates among 1991 and 2016. The estimated relationships in the reports NHPAU's
'Affordability Issues'1 (2007) and 'Affordability Still Issues'2 (2008) based on raw data covering
the timpe period up to 2007. The interest rate rates have since increased dramatically, and
significant developments in the mortgage business have also taken place, including the
regulation of mortgages and the relation between mortgages and interest rates9. These alterations
are of a magnitude which implies that a model estimated for the preceding cycle would not be
used accurately for the months since 2007.
Unemployment: Unemployment is correlated with economic. Despite through unemployment,
less people can afford a home. Nevertheless, then again the threat of insecurity can deter users
from joining the housing market.

Economic growth: Housing demand is contingent on income. Greater economic development
and rising wages will allow companies to consume more on homes; this will increase inflation
and drive up the price. In actuality, house price inflation is often noted as a stretchy earnings
(premium good); economic growth leads to a larger percentage of household income getting
invested. Likewise, declining wages in a downturn would mean those people can't even afford,
while those who keep their insurance can fall back on the living expenses and eventually wind up
being burglarized of their house.
Consumer confidence: Trust is significant in deciding as to if individuals would like to take
chances out a personal loan. Especially perceptions more toward the real estate market are
essential; customers will postpone purchasing if they think the house prices would fall (Ruiz and
Vargas-Silva, 2018).
Supply: Delivery shortages drive up the costs. Excess production would push down costs. For
instance, an approximate 700,000 new houses are built in the Irish real estate boom from 1996-
2006. When the real estate market crashed, an important overproduction remained to the market.
Property prices were 15 per cent, and costs dropped with production higher that request
Mortgage availability: In the 1996-2006 boom periods, numerous financial institutions had a
keen interest in lending mortgage loans. They enabled people to spend large larger amounts of
incomes (e.g. 5 percent revenue). Financial institutions also mandated much reduced reserves
(for example, 100 percent housing loans). This simplicity of applying for a mortgage implied that
price of housing expanded because more citizens could purchase now. After the 2007 financial
crisis, though, banks and other financial institutions have strained to collect funds to borrow on
the capital markets. They have however stiffened their capital requirements which require a
higher payment to build a property. This has decreased student loan accessibility and a decrease
in price.
Interest rate: The amount of mortgage repayments is influenced by interest rates. A
combination of sustained interest rates will significantly raise monthly mortgage costs and lead
to lower availability for a room purchase. Higher interest rate the rent comparatively more
appealing than the purchase. If borrowers have continuous aggregate loans, interest rates get a
larger influence. For instance, the strong increase in interest rates in 1990-92 triggered a very

sharp decline in UK property prices, as many homebuyers were unable to purchase interest rate
rises (He, Lu and Berrens, 2018).
3. How has government action over the period 2009-2019 affected the UK housing market?
The most effective way the national government can ease the pressures of
accommodation costs on low-income families is by providing them incentives. Regulation that
raises wages such as accumulated additional tax, decent wages or a planned guaranteed
maximum wage often support disadvantaged households pay a mortgage. British housing costs
have first from at least 2002 to their yearly fall in 2009. Property values in London, as per the
British newspapers, reportedly saw the worst costs lower 5.3 per cent. The London property
values are or maybe one of UK's most common discussion topics. This is largely due to the fact
that house prices have almost doubled since before the mid-1990s. The Government is concerned
that insufficient residences have been constructed to satisfy the requirements of an increasing
and aging society. Its focus is to maximize production both of latest and reconfigured vacant
apartments. A total of 118,190 new construct residences were constructed in England in 2012, a
9 percent rise over the last year but a 31 percent decline over the high of 170,610 in 2008.
During the last 5 years, only 610,000 housing units have been built, compared to nearly 800,000
in the previous five, a decrease of 23%. This restriction on the availability of new
accommodation has ensured that house prices have remained fairly steady throughout the last 3
years, despite the complexity in getting funds from investors. Actually 15 % of the population is
in the rental market and this number is projected to almost double during the next 10 years. The
UK's affordable housing permeability is low – one of Europe's lowest – government's legislation
is concentrated on enhancing supply elastic properties so housing construction are more sensitive
to market changing requirements. There are defined various actions that are taken by the UK
government in context of Housing market from 2009 to 2019:
Build more social housing: Enabling broader independence for will local government
(community) to raise earnings to fund the development and procurement of housing benefit
could help counteract the decline for the past 10 - 20 years in the development of committee
facilities. An option is also to enhance funding for the 1,400 housing committee that are
obligating for developing and managing nearly 3 million homes in the UK.

Reducing the number of empty house: There are many alternatives for this involving mandatory
purchase requisitions if homeowners permit their premises to stay vacant for 6 months or longer.
These premises will then be given access at market segment rentals to individuals on
accommodation waiting times (Wu, 2018).
Stamp duty: Currently , the government expanded stamp duty to 3 per cent for features more
than £250,000 residences from £ 60,000-£ 250,000 pay 1 per cent characteristics features £
60,000 pay 0 per cent The increasing trend in inheritance tax was focused on reducing
requirement for characteristics over £250,000, particularly in real estate locations like London.
4. Predict what would be the impact of COVID – 19 on UK housing market
The corona virus has delayed the Existing labor real estate market. When the government
restricted house advertising and prohibited mortgage brokers from selling new assets as part of
the wider efforts to curb the impact of the disease outbreak. To reaction to the disease outbreak,
the Bank of England reduced interest rates to early March from 0.75 to 0.25 per cent. It then
reported a second drastic cut later that night, bringing borrowing costs to the lowest ever rate of
0.1 percent. While British people also can keep moving in the center of purchasing a home, real
estate browsing was delayed and the departments of mortgage brokers permanently closed as
portion of broader-ranging initiatives to minimize COVID-19 diseases. Property values and
interaction had gathered that since beginning of 2020, managed to help by decreased Brexit and
political instability, but this pattern has taken dramatically backwards.
Due to face of COVID-19 disease in UK housing market people demand for the house
and sales of house fall down about 80%. UK home prices had started to rebound from Brexit-
induced volatility by the end of 2019. And the so-called Boris bounce from the Tories' December
election victory set the stage for a good start to 2020. But then corona virus happened to come
along, going to send the UK into quarantine, meaning purchasers couldn't visit homes, a
relatively vital component because once moving soon. The spectacular economic fallout has also
made some individual more cautious about making massive acquisitions correct presently.
Although the effect of the corona virus infection on UK house prices is still not well known,
experts predict that in the second and third rounds of 2020, they will fall. During the corona virus
lockout, UK house prices fell as analysts informed the property market was hardly working
because of the constraints. Rightmove's new data shows that the average selling price of property

fell 0.2 percent to £311,950. UK prices have risen 2.1 per cent in April last year. Analysis has
shown that current vendors have stayed predominantly on the sector, with overall stock available
for selling down 2.6 per cent because the 23 March lockout was implemented. Miles Shipside,
director of Rightmove and a consultant on the housing market, said: "operatives disclose better
connection, with both producers and consumers eager to hang agreements around each other
(Wind and Dewilde, 2018).
Citizens do not have a working economy when consumers are unable to purchase and
vendors are unable to sale, and so the emphasis must be on what is necessary to properly the
economy stabilize until the lockout can be securely relieved. Although some homeowners may
be worried about the risk of brief-term drops in home values, others take the long-term view and
live up to their promises to go forward. This is managed to help by lending institutions going to
extend the lifespan of current loan offers by 3 months, and by proposed laws on adaptable
project cost. So overall analysis it is getting that corona virsus show negative impact on the UK
housing market (Murie, 2018).
RECOMMENDATIONS
As per the above report it has been recommended that the housing market the locking
down of the corona virus has pushed the UK housing market into somewhat of a delayed
suspension. Following March 27, whenever the government has declared it was going to
postpone rental property till after the recession, most market participants are being left high and
dry. Mortgage borrowers have removed goods from of the marketplace and social distance
initiatives have made the advertising, valuation and presentation of semi-vacant homes unlikely.
To grow in this market require contacting of more customer and providing belief to all the
houses are virus free and sanitize properly.
Vendors will lose their property now and they can be regarded by buyers — and much
has improved. With one item, the logistics of trying to navigate the industry is now much more
complex and difficult. Purchasers were instructed to take virtual tours before scheduling a
sighting. After they've seen a property in individual, they are asked by operatives to register a
wellbeing statement, or they may have their average temp inspected at the doorway.

CONCLUSION
As per the above report it has been concluded that the UK housing prices are changed due
to face various difficulty. There are various economic factors that impact on the average prices
that cut down and increase. Many time governments take different actions and set up effective
legislation that impact on the average price of house. Due to Corona virus this sector fall down
and prices are deducting in the market.

REFERENCES
Books and Journal
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gateway suburbs in Australia: The challenge of private housing market settlement for
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Bahmani-Oskooee, M. and Ghodsi, S. H., 2018. Asymmetric causality between the US housing
market and its stock market: Evidence from state level data. The Journal of Economic
Asymmetries. 18. p.e00095.
Tsai, I. C., 2018. Housing price convergence, transportation infrastructure and dynamic regional
population relocation. Habitat International. 79. pp.61-73.
Murie, A., 2018. Shrinking the state in housing: challenges, transitions and
ambiguities. Cambridge Journal of Regions, Economy and Society. 11(3). pp.485-501.
Ruiz, I. and Vargas-Silva, C., 2018. Differences in labour market outcomes between natives,
refugees and other migrants in the UK. Journal of Economic Geography, 18(4), pp.855-
885.
He, X., Lu, N. and Berrens, R. P., 2018. The case of the missing negative externality? Housing
market effects of fracking in the Niobrara shale play, Colorado. Journal of Environmental
Economics and Policy. 7(3). pp.223-243.
Antonakakis, N., Chatziantoniou, I., Floros, C. and Gabauer, D., 2018. The dynamic
connectedness of UK regional property returns. Urban Studies. 55(14). pp.3110-3134.
Wu, F., 2018. Housing privatization and the return of the state: changing governance in
China. Urban geography. 39(8). pp.1177-1194.
Wind, B. and Dewilde, C., 2018. Home-ownership and housing wealth of elderly divorcees in
ten European countries. Ageing & Society.38(2). pp.267-295.
Murie, A., 2018. Shrinking the state in housing: challenges, transitions and
ambiguities. Cambridge Journal of Regions, Economy and Society. 11(3). pp.485-501.
Online
Factors affect on hose prices. 2020. [Online]. Available through:
< https://www.economicshelp.org/blog/377/housing/factors-that-affect-the-housing-market/>
Corona virus impact on hose prices. 2020. [Online]. Available through:
< https://www.cityam.com/how-badly-will-coronavirus-hit-uk-house-prices-in-2020/ >
Statics 2009 to 2019 house price. 2020. [Online]. Available through:

< https://www.statista.com/statistics/751605/average-house-price-in-the-uk/ >