UK Housing Market: Analysis of Changes, Determinants, and COVID Impact

This report provides a comprehensive analysis of the UK housing market between 2009 and 2019, examining key trends and influential factors. It begins by charting the fluctuations in average house prices, highlighting periods of growth and decline, and identifying the impact of the 2008 financial crisis, government policies, and external events like the Olympic Games and Brexit. The analysis delves into the economic determinants driving these changes, including economic growth, interest rates, household numbers, mortgage availability, unemployment, and consumer confidence. Furthermore, the report assesses the effects of government actions on the housing market, such as policy interventions and regulations. Finally, it offers a prediction on the potential impact of COVID-19, considering its disruption of the market dynamics. The report draws on data from the Stratford London Zone to illustrate these trends and provides a detailed understanding of the UK housing market during this period.

UK House Sales

Abstract
Present document has presented the information in relation to how United Kingdom's
housing market has specifically faced different changes from 2009 to 2019. There are various
economic determinants has impacted in both negative and positive sense on real estate industry.
On the other hand, economic crisis is specifically faced by most of world faced in middle of the
year of 2007 has continued for a longer period of time.

Table of Contents
Abstract............................................................................................................................................2
Introduction .....................................................................................................................................4
Main Body.......................................................................................................................................4
1. How have average house prices in the UK changed over the period from 2009 - 2019?.......4
2. What are the economic determinants of the changes outlined in your answer to Question 1?
.....................................................................................................................................................7
3. How has government action over the period 2009-2019 affected the UK Housing market?. 9
4. Predict what would be the impact of COVID-19 on UK Housing Market?.........................10
Conclusion.....................................................................................................................................11
REFERENCES..............................................................................................................................13

Introduction
United Kingdom's housing market can be considered as a sector which majorly impacts
economic conditions of the country. Housing economics can be defined as administration of
economic techniques, rules and regulations that are applied by government of a country in
context to real estate markets (Adams, 2020). In other terns, housing market specifically predicts
the different patterns that are available or linked to supply, prices along with the demand of
houses. The particular area, which has been taken into consideration is Stratford London Zone.
On the other hand, this report will be delivering the information in relation to how average
housing prices has changed of United Kingdom from the period (2009 -2019). Also, report will
keep it's focus on effects of Novel Corona Virus or Pandemic COVID-19 on house market.
Including this, report will also put light on economic determinants of the changes that took place
within housing industry.
Main Body
1. How have average house prices in the UK changed over the period from 2009 - 2019?
Housing market, can be considered or defined as industry where, prices along with sales,
demand and supply of residencies takes place in a particular nation. Including this, if it is talked
about Stratford London Zone, then it is said to be or considered as a district which is located at
East Ending area of London, within London Borough of Newham, England. It is also considered
to be a part of Lower Lea Valley, which makes it as a peaceful place to live. However, late 20 th
century has been considered as a period where, it's housing market got decline just like any other
country or city. It has been analysed that housing market along with the prices of different
houses specifically gets affected by different elements and sectors (Antonakakis and Floros,
2016). Economic crisis, which the whole world faced in middle of the year of 2007 has
continued for a longer period of time.

(Sources: The housing market, 2020)
If it is talked about from the starting of 2009 to 2019 (past 11 years), then average prices
has changed a lot, where 2013 was considered to be the year where Average housing prices were
at it's peak and resulted into decline of sales. In the year of 2008, United Kingdom's housing
prices rate (on an average) was approximately £2,50,000 but late effect of financial crisis
reduced the sales of houses and real estate sector had to face a decline in approximately 19.6% in
starting of 2009. The lowest house price which was recorded in the starting of the year 2009 was
£1,47,746 and this resulted into negative impact of housing market of United Kingdom. When
the after effects of financial crisis started reducing, it resulted into increasing house prices where
an average house price, which was carried out was approximately to £2,20,000 (Baptista and et.
al., 2016).
Government of United Kingdom has also started focusing to push up the economy
through developing different and new rules and regulations which resulted into hike of 25% price
rates in the year of 2010. Away with this, average price rates again took rise in 2011 with a
percentage of 0.9. In the year of 2012, London, England organised Olympic Games which
resulted into heavy growth in GDP rate which impacted positively on Real Estate industry of
Illustration 1: The housing market

United Kingdom has increase average pricing rates of houses by 1.4%. Also, in the year of 2013
George Osborn has built a policy, where government of United Kingdom started offering citizens
with mortgage and these rate of interest was propounded approximately to 5% (Benbouzid,
Mallick and Pilbeam, 2018).
(Sources: Housing Supply and Demand, 2020)
Away with this, after having a successful year which was 2014, again in 2015 average
pricing rates started declining and the fall was recorded in 3.2% decline. Including this, house
prices (on an average), was considered to reach approximately to £3,00,000 in the year of 2018
(Best and Kleven, 2018). Lastly, in the year of 2019 after the completion of Brexit Agreement,
where United Kingdom voted out from European Union which impacted economy in both
positive and negative sense. If it is talked about the interest rate which was applied on housing
market of United Kingdom, it decrease by 0.6%, which resulted into increase within demand, but
Illustration 2: Housing Supply and Demand

average annual value was also raised by 5%, which resulted into rise within average houses and
the average prices recorded was approximately to £2,50,677 (Chuang and et. al., 2018).
2. What are the economic determinants of the changes outlined in your answer to Question 1?
In present time, Stratford London Zone's housing market is continuously facing ample
number of changes and it was analysed that there are various reasons that took place due to
which alterations came in front within housing market. Some of these economic determinants
which has brought ample number of changes within demand and supply of houses within
Stratford London Zone. All these economic determinants are presented underneath: Economic growth: This is also said to be a crucial determinant, that has majorly affected
housing industry of United Kingdom. Basically, it consists of revenue rate and economic
growth rate, which stays directly enclosed with GDP Value. Therefore, it can easily be
said that it has resulted into direct impact on average prices of houses within Stratford
London Zone. If the demand increases then supply will also gets increased. Also, it can
be said that with higher rate of growth it affect the income level of citizens of Stratford
London Zone as it impacts upon living standards. Also, if the living standards improve of
the citizens belonging to Stratford then it will directly impact positively on investments
that are being made by them for houses. On the other hand, it can also be said that this
determinant carries negative impact as well and this could be understood with a good
example of recession period. Basically, when recession period started the growth rate of
the real estate started going down, where individuals not only in Stratford London Zone
but at the other areas too, started loosing their jobs and this resulted into, decline within
buying and purchasing process of houses (Cook and Watson, 2016). Rate of interest rate: This is considered to be the rate, which is applied by banks on the
different loans/mortgage amount that is given by them to borrowers. If it is talk about
Stratford London Zone, the Banks apply Rate of Interest (ROI) on different mortgage
given by them on monthly basis. Away with this, it can be said that high interest rate
impacts directly on demand and supply of houses. Therefore, it is considered to be the
primal economic determinant which affects the most on supply and demand of the houses
within real estate industry. Number of households: Another crucial economic determinant, which affected the most
on values of housing rates within Stratford London Zone. Basically, as number of buyers

are continuously increasing, it may directly affect the sales, which may raise the value
because the demand may specifically increased market prices as well. From the period
2009-2012, buyer's numbers did not increased but when after effects of financial crisis
started declining, these numbers of purchasers started improving from 2013 (Harding and
et. al., 2018).
 Availability of mortgage: At the initial time frame (from the year of 1996 to 2006), it has
been analysed that Bank of England and other banks were lending money (loan) based on
the mortgage time period. Away with this, it can also be said that it helped individuals in
getting loan with larger amounts. Basically, Banks were offering borrowers with the 100
loans considering the time frame of mortgage. But, from 2006 and till today, availability
of mortgage, specifically changes from time to time considering different policies, rules
and regulations. Mortgage rate has raised from past year and this has affected number of
buyers not only in Stratford London Zone but among other zones as well of United
Kingdom.
 Unemployment: When the rate of unemployment specifically increases, it can be said
that income level decreases, which carries negative impact on housing industry of
Stratford, London because it effects negatively the demand of houses. On the other hand,
it is also said that, if unemployment decreases it directly increase the purchasing power of
buyers and raise the supply and demand of houses. Recession's after effect can be seen
from the period of 2013 to And in 2013 the rate has been increase in Britain. Customer returns: It has been analysed that, this can also be considered as confidence
and trust play vital role during the time individual take any mortgage within Stratford.
Also, it has been analysed that ROI of civilians has decreased during 2010 period of time. New forms: The quantity of building new house additionally exhausted the pace of house
advertise. In 2014, the quantity of house has been raised which legitimately influences
the estimation of houses. Supply rate of housing: It influence the interest the lodging if the pace of contaminate ate
of house are high the it may be plausibility request get low yet in some restrictive where
the purchasers need hose then they buy at higher rate. In the year of 2007, ratio of
housing price has been increments and it additionally increment the quantity of
purchasers and well as provider in Britain.

 Affordability of housing: It characterizes as the proportion required affecting the interest
of procurement house and exchange inside the house advertise. At the point when the
cost of house has been raise it become hard to house part to increments in house if their
salary proportion additionally increments with the augmentation of cost of house. In 2007
the proportion of lodging cost has been increments concerning the salary level of
personal it straightforwardly influence the buying propensities' this stage the estimation
of house is a lot of experience along these lines personal request has been diminishes
because of it (Hudson and et. al., 2020).
 Geological factor: United Kingdom's housing market is additionally influenced by
geological components. despite the fact that the nations national cost of house is
diminishes yet there are some territory in United Kingdom where the cost of house rodent
will be increments. In London, England the growth rate goes high even in the hour of
rescission period's it is the abatements are and here the interest is high as contrast with
gracefully of houses.
 International trade: If it is talk about different countries of European Union, the price of
houses specifically gets affect with the foreign buyers as investor's invest within house of
United Kingdom and in foreign countries as well. This specifically impacts upon housing
values along with the prices as well linking to national and international trade.
3. How has government action over the period 2009-2019 affected the UK Housing market?
Real Estate sector consists of both government and private agencies, that are
continuously performing different operations in order to offer clients with houses of their choice.
But, it has been analysed that government of United Kingdom, specifically bounds with different
actions that already took place from the time span of 2009 to 2019. These actions along with the
policies prepared by government has affected Stratford London Zone, along with other zones as
well of United Kingdom (Jones, 2016).
The primal most action, which was taken by government of United Kingdom towards
housing market was in the year of 2008 where new scheme was prepared. Specifically, it is said
that in recession period there were new houses were getting built with low prices by government
agencies so that investors could start investing. This step would help in increasing the flow of
monitory in the market. It has also been analysed that, the new buying scheme would also help
investors through providing them with money through giving mortgage and loans.

Approximately, 95% of the overall price of the houses were offered by investors so that they
could effectively purchase the houses for investments in much more effective and in efficient
manner. This impacted positively on overall performance level of United Kingdom's Housing
market. Away with this, it has also been analysed that there were same effective deals were also
offered by government of United Kingdom so that contractors and builders could get support
from government and start taking initiatives even those organisations as well that were
performing operations on contract basis.
Then in 2014, United Kingdom's Government has launched EBBsfleet Garden City as an
effective new program which consists of more than 1500 houses. This would help government to
boost the investment capacity of investors and to improve employment rate as well. This action
impacted positively on United Kingdom's housing market (Payne, 2020). On the other hand, it
has also been analysed that referendum or Brexit Agreement has created uncertainties within the
business environment and this also had adverse effect over housing market. This could be
understood with a very good example of immigrants (belonging to European Union), who were
deciding to start living in United Kingdom or for investment purpose, there were no taxes were
applied but due to Brexit Agreement, investment done by any immigrant would have to pay the
royalty, taxes and other duties. Due to this, many of the immigrants changed their mindset
afterwards and resulted into decline within both demand and supply of different houses.
Including this, it has also been analysed that Brexit brought fear among immigrants of loosing
their jobs because, the mindset that has been built directly impacted negatively because most of
the employees belonging to foreign countries (mostly from European Union) started resigning
their jobs in much effective and in efficient manner. Therefore, these are said to be some of the
crucial actions taken by Government of United Kingdom as they directly affected the housing
market mostly in negative sense.
4. Predict what would be the impact of COVID-19 on UK Housing Market?
Almost every single country in present time dealing with pandemic COVID-19, which
has created situation of financial crisis. If it is talked about the average housing prices then it got
reduced by diminishes 1.7% which can be considered as the second loosing phase faced by house
market of United Kingdom. Administration of United Kingdom also faced moderate breeze and
measures as well the moderate spread of in this way pandemic. The supreme class groups of
United Kingdom can also not accept new houses and put resources into the housing market. In

the beginning of 2020 the loan fee was high, however because of this pandemic everything goes
adores. Based on the information given by analyst, there will be selling and purchasing going to
take place within housing from starting of May or July of 2020. Also, the interventions related
with the COVID-19 would require some investment of the economy to revamp and come in
again in typical mode. For the up and coming 3 months the value are to raise and house market
by 8% (Tsai and Tsai, 2018).
Some of the other problems, which started due to outbreak of Novel Corona Virus within
United Kingdom was continuous decrease within GDP rate of United Kingdom. On the other
hand, price of houses has also got declined where month of April and March has faced biggest
fall since financial crisis that took place in 2007. Also, many business organisations not only
belonging to Housing Industry of United Kingdom, but almost every sector started cost cutting
process, which affected economic growth and resulted into rise in unemployment rate. Away
with this, it has also been analysed that prices of houses in near future might directly rise and the
reason that came in front is increase in demand, and this the crucial time when this sector could
effectively rise.
But at present, since healthcare department along with World Health Organisation are not
able to develop a vaccine for Pandemic COVID-19, this routine of lock-down among countries
will take place because of rising numbers of infected individuals with Corona Virus. Including
this, even the government of the UK also have lots of problem and they have to mange and
control the loss housing market incurred use to the COVID-19 (Zhang and et. al., 2017).
Therefore, these are said to be some of the problems that are faced by Housing Market of United
Kingdom.
Conclusion
With the help of above mentioned report, it is being concluded that Housing market of
United Kingdom has faced ample number of changes from the period of 2009 to 2019.
Economical factors are considered to be some of the crucial ones, which has majorly influenced
United Kingdom's housing market like unemployment, availability of mortgage, economic
growth, rate of interest and so on. Due to the recession the market average price rate goes down
the government made policies and impact of Olympic the rate again raise which the of new
buyers, changing in interest and mortgage rate, trend in market. But in the year of 2018, Brexit
agreement and one the COVID-19 the country again suffer from the lowest interest rate the

demand get down due the COVID-19 and the effect of changing scenario government policy
many individuals lost job and interest rate of loans goes high. It is also summarised or concluded
that, it may be possibility that in the upcoming 2 to 3 years the housing market of UK will not be
lead in boom stage as the COVID-19 pandemic adversely affect the whole market.

REFERENCES
Books and Journals
Adams, P., 2020. UK Housing Market Expected to Make Modest Gains in Next Six
Years. Energy.
Antonakakis, N. and Floros, C., 2016. Dynamic interdependencies among the housing market,
stock market, policy uncertainty and the macroeconomy in the United
Kingdom. International Review of Financial Analysis, 44, pp.111-122.
Baptista, R., Farmer, J.D., Hinterschweiger, M., Low, K., Tang, D. and Uluc, A., 2016.
Macroprudential policy in an agent-based model of the UK housing market.
Benbouzid, N., Mallick, S. and Pilbeam, K., 2018. The housing market and the credit default
swap premium in the UK banking sector: A VAR approach. Research in International
Business and Finance, 44, pp.1-15.
Best, M.C. and Kleven, H.J., 2018. Housing market responses to transaction taxes: Evidence
from notches and stimulus in the UK. The Review of Economic Studies, 85(1), pp.157-
193.
Chuang, M.C., Yang, W.R., Chen, M.C. and Lin, S.K., 2018. Pricing mortgage insurance
contracts under housing price cycles with jump risk: evidence from the UK housing
market. The European Journal of Finance, 24(11), pp.909-943.
Cook, S. and Watson, D., 2016. A new perspective on the ripple effect in the UK housing
market: Comovement, cyclical subsamples and alternative indices. Urban
Studies, 53(14), pp.3048-3062.
Harding, A., Parker, J., Hean, S. and Hemingway, A., 2018. Supply-side review of the UK
specialist housing market and why it is failing older people. Housing, Care and Support.
Hudson, R., Manahov, V., Metcalf, H. and Zhang, H., 2020. Do house prices overreact to
relevant information? New evidence from the UK housing market. Investment
management and financial innovations, 12(3).
Jones, C., 2016. The credit crunch: short-term UK housing market correction or long-term
tipping point?. International Journal of Housing Policy, 16(1), pp.70-90.
Payne, S., 2020. Advancing understandings of housing supply constraints: housing market
recovery and institutional transitions in British speculative housebuilding. Housing
Studies, 35(2), pp.266-289.
Tsai, H.C. and Tsai, I., 2018. Market depth in the UK housing market. Economic research-
Ekonomska istraživanja, 31(1), pp.406-427.
Zhang, H., Hudson, R., Metcalf, H. and Manahov, V., 2017. Investigation of institutional
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Online
The housing market. 2020. [Online]. Available through:
<https://www.economicsonline.co.uk/Competitive_markets/The_housing_market.html>
.
Housing Supply and Demand. 2020. [Online]. Available through:
<https://saylordotorg.github.io/text_macroeconomics-theory-through-applications/s08-
01-housing-supply-and-demand.html>.