UK Housing Market Analysis: 2009-2019 Trends and Coronavirus Impact

This report provides a comprehensive analysis of the UK housing market, examining the trends in average house prices from 2009 to 2019. It delves into the economic determinants that influence these price fluctuations, including economic growth, unemployment rates, interest rates, consumer confidence, mortgage availability, and population changes. The report also explores the impact of government actions on the housing market during this period. Furthermore, it includes a prediction of the potential impact of the Coronavirus pandemic on the UK housing market. The analysis covers both demand and supply-side factors, offering insights into the complex dynamics of the UK property sector. The study uses statistical data and graphs to demonstrate the trends and factors influencing the market.

Business

Table of Contents
INTRODUCTION ..........................................................................................................................3
1. Presenting the change in average price of house in UK over a period from the year 2009-
2019.............................................................................................................................................3
2. Stating the economic determinants of change represented in price of house .........................4
3. The manner in which action of government impacted housing market in UK from the
period of 2009-2019....................................................................................................................8
4. Predicting an impact of Coronavirus on the UK housing market ..........................................8
CONCLUSION ...............................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Business is been outlined as an entity that is engaged in the professional, commercialised
& industrial activities. It refers to an organized effort & activities of an individual in producing
and selling the goods and the services for earning profit. In other words, it refers to an
organization or the economic system where the goods & services are been exchanged for gaining
profits and earning money. The present study is based on UK housing market and provides a
deeper insights towards the change on in the price of houses over a period of 10 years.
Furthermore, the factors or components that influence the prices are also been highlighted in the
study. Moreover, it also includes the action taken by government along with its effect and
predicting effect of novel coronavirus on housing market in the future.
1. Presenting the change in average price of house in UK over a period from the year 2009-2019
Interpretation- The above graph shows that an average price in UK has been increased
by 2.2% in month of November in year 2019, up from 1.3% in the month of October 2019.
Over the last 3 years, general lag in the UK housing value growth has been seen which is mainly
impelled by the slowdown in east & south of an England. In East of England, the lowest growth
has been accounted where the price declines by around 0.7% over the year that is from 2009-

2019. This has been followed by the London, where the prices increased with a percentage value
of 0.2% over the years. Over the foregone years, the prices of UK house has been rising at fast
rate on the record for several years, as the sellers fell as more assured about prospect for housing
marketplace after a general selection as per the right-move (Chuang and et.al., 2018). An average
price of the properties in the market jumped by around 2.3%, a large rise for time period since
property site begin the cost of house index in the year 2002. Around 65000 of the UK geographic
area were been marketed over a period with average asked price of approx. pound 306810. In
accordance to right move, an option result provided panel of the stability for the movement after
instability period since Brexit vote that had caused some in putting off the move. Housing market
dislikes an uncertainty, unsettled the political look over last 3.5 years since EU referendum has
caused some movers in hesitating. There seems to be the release of such pent-up demand that
suggests presence in the store for spring market.
As of the July 2019, prices of residential property in UK reflects the lowest annual rise
since the year 2012. An average price of the house in UK increased through 1.1% within 12
months prior to the month of July 2019, by reaching estimated value of around 216 thousand
pounds within 2nd quarter of the year 2019. The trend of rising the prices of housing is seen in
entire UK as when the comparison of various European countries' residence property is made,
houses became as more and more expensive from the year 2013 onwards in UK. The prices are
not been expected to decline, it is predicted that the residential prices would be growing in
coming years because British government would begin to focus on the domestic issues after the
condition of Brexit.
Thus, average price of house in UK increased by 2.2% over years to November 2019, up
from the 1.3% in the month of October 2019. The average prices increased over year in England
to Pound 251000 that is 1.7%, Wales to Pound 173000 that is 7.8% ,Northern Ireland of pound
140000 and Scotland to pound 1550000 which is seen as 3.5%. An annual rise in the England
has been driven by North West & West Midlands. However, the lowest growth rate found East of
England resulting as negative 0.7% followed by the London as positive 0.2% in an overall UK.
2. Stating the economic determinants of change represented in price of house
The housing industry is mainly induced by economic state, real income, interest rates,
change in population size etc. With the period of increasing demand and the limited supply, it

will result in rising housing prices, increased risk of the homelessness and rising rents. The
analysis would be made based on the market forces that is demand and supply that are as
follows-
Demand side assessment-
Economic growth- With higher growth in the economy and rise in income, individual
would be able to spent more on the houses, this would increase the prices and demand of the
houses. As per the concept, demand for lodging is often times seen as income elastic where
rising income leads to larger proportion of an income spend on the houses (Banyte and Maliene,
2017). However, in recession, decline in income would indicate that individual cannot spend to
purchase & those who left their job might fall down their ,mortgage payments & ends up with
home repossession. This means that rising income encourages individual's demand in buying the
house and vice versa.
Unemployment- In case of rising unemployment, fewer individual will be able to afford
the purchasing of house. Moreover, fear of state might deter the individual from entering into
market of property (Tsai, 2018). On other state, if unemployment rate decreases, means that
most of the individual will be having their job and earns, this induces the demand for purchasing
house and resulted a growth in housing market.
Interest rates- This determinant plays a crucial role in identifying the mortgage cost and
repayments of interest. Majority of the UK homeowner prefers for taking out the rate of variable
mortgage instead of the landmass where the fixed rate of mortgage deals are seen as more
common. High rate of interest period would result to increase in the cost of the mortgage
payments & would cause lower demand in buying the house (Apergis and Payne, 2020). On
other note, lower rate of interest helps the individual in getting the loan at lower price and
interest rate which clearly increases the demand for housing market and due to this majority of
the individual tends to buy the house.
Confidence of Consumer- The need for the houses mainly reckon the consumer
confidence. Particularly, it depends on the individual's assurance regarding upcoming economy
& the housing market. It the individual anticipate the prices to increase then demand would rise
so that individual could gain from the rising wealth. In the boom, need for the houses increases
with a high pace than income (Cochrane and Poot, 2019). On other note, if an individual fears
house prices can fall, it will directly lead to defer the buying of house.

Mortgage availability- It is the most of the essence factor which determines an effective
requirement for the houses that depicts the disposition of the banks in lending mortgages. In case
the bank gives mortgage with higher multiples of income then effective demand for the house
seems as greater. Willingness of banks in lending mortgages finance could vary based on
strength of interbank loaning segment (Hwang, Cho and Shin, 2019). Credit crisis in 2008,
showed sharp rise in cost of the interbank lending and the fall in mortgage accessibility. Many of
the mortgage products has been withdrawn, by making it as more difficult for the homeowners
for getting on ladder of property.
For example- Mortgages like 125% & 100% mortgages had been withdrawn due to
which banks increasingly demand higher deposit before the lending mortgages.
Affordability- Increase income means that the individual are been able to expend for
spending more on the housing. During the time period of an economic growth, need for the
houses attend to increase (Ball, 2017). Also, the demand for the lodging tends to be as luxury
good, therefore, rise in the income cause greater percentage of the rise in demand. Contrary to it,
with increase in price of the house, individual cannot afford to buy the house and it leads to
decline in demand.
Population- With rising population, the desire for purchasing the house increases as more
individual would be requiring place to live in. As the population in England is been predicted to
grow and is resulted as growing in past periods, housing demand rises. For instance- growing no.
of single person who live alone led to increase in need for houses. Moreover, housing demand
does not only depend on people but likewise an average size of the household. Certain
demographic and the social factors causing rise in no. of householders at a faster rate as
compared to increase in population (Payne, 2020). Such demographic modification involve issue
like age of the individual leaving a home because of rising life expectancy outcome to more of
single old age individual, divorce rates leads to increased number of the single- parent families.
Renting cost- This reflects a 22% cost increase of the renting despite the financial crisis
& the housing crash. This helped in causing UK housing price towards rising after the year 2011.
If renting cost rises, then individual will make higher efforts in trying & buying the house
through the mortgage turn as relatively cheaper (Savva, 2018). House market of UK has been
buoyed through costly price of renting that encourages buy for letting the lenders and motivating
the households in stretching their budget as much as possible in getting on housing ladder.

Supply side analysis-
A shirt of the supply pushes or increases the prices as surplus of supply cause the price to
decline. For instance- Boom in property of Irish of the year 1996-2006, an anticipated 700000
building new houses. When the property market has been break, market was left-handed with the
fundamental overmuch supply. Rates of vacancy reached to 15% & with the supply higher than
the need and the prices fell (Sulaiman, Mohammed and Ghani, 2018). Supply of the housing is
dependent on the existing stock and building new house. It seems as quite inelastic because for
getting permission of planning and in building houses depicted as the time-consuming process.
The period in which prices of houses rises, it might not cause equivalent rise in the supply,
specially in the countries like UK with a limited land for the house building.
Technology- With advancement in technology, building of the houses tends to rise as
individual can build their home within less or limited time frame. On other side, with existing
technologies, building of new house is seen as the time-consuming and complex task.
Price of the substitute goods- In case the price of rental houses gets lower and the house
built by the builders are selling the house at lower price then the building the home on own will
reduce as the individual would not have bear higher cement price and construction cost.
No. of suppliers- If the suppliers in establishing houses or flats is increasing then
individual tend to build more number of house as low cost would be accounted (Al-Masum and
Lee, 2019). However, in case number of the suppliers are less than an individual would not
prefer to built house.
Price of factors of the production- With rise in the price of factors of the production,
cost of constructing houses increases while decline in price of the production factors, the cost
declines and an individual tend to construct his own house.
Future price expectations- If it is expected that in future the prices of constructing the
houses will be rising then currently more individual will seek to build house. On other side, if in
future the price are expected to decline or fall then at present the individual would not build their
houses.

3. The manner in which action of government impacted housing market in UK from the period of
2009-2019
The main problem faced by UK in respect to its housing market is that shortfall of affordable
houses, high deposit requirements along with increase in the demand of housing among the
young people have increased the demand for private renting. The UK government has
implemented various measures which includes new permitted development rights with respect to
conversion from commercial to residential use under the specific defined market conditions. But
the impact of these measures and the extent to which it will speed up on account of the response
to the housing supply along with the change in demand is yet to be seen (Brener, 2020). In the
year 2015, the government has taken initiative which aims at securing 1 million net addition in
the housing stock. Also, DCLG and the homes and Communities Agency (HCA) set out a plan in
order to achieve the target of accelerating the housing supply and to timely deliver the 300000
net additional houses in a year on an average. But there are certain points of concerns which are
not having enough support from the government in case of affordable rented housing specifically
at social rents. If the 300000 houses are built then it will have a positive impact over the UK
housing as it will result into increase in the occupancy because of lifting from the borrowing
caps.
In 2009, the impact of 2008 recession still had a influence over it. But the government
has forecasted the increase in the immigration which will result into upward trend and based on
this the government had estimated that the population will increase in the next 2 decades which
results into effectively managing the situation. The impact of this plan has positively affected the
UK housing market and its influence was for long term as it was expected that UK household
numbers to increase substantially in the same period as well. The core housing policies were
focussed on the supply side (Salt, 2018). The government has attempted to increase the supply
along with changing the planning system. It includes policies such as first time buyers and the
key workers to get property ladder. These policies were implemented to serve the key goals of
the policy of the Labour Government between the year 1997 to 2010. The government also
imposed policy called “Sustainable Communities: Building for the future”. The aim of the policy
will lead to tackling the geographical differences in the housing market. It also aims at speeding
up the new housing supply (McKee, Muir and Moore, 2017). The Housing Green Paper which
was the strategic policy, which involves the tangible housing supply in order to meet the rising

demand of housing along with addressing the issue of affordability issues. All these policies
which are being implemented by the UK government has lead to increase in the supply of
housing and meeting with the demand along with the reasonable and affordable prices. This has
brought little stability in the UK housing market.
4. Predicting an impact of Coronavirus on the UK housing market
Housing prices in UK would be falling in coming periods but are seen as unlikely to drop as
dramatically in the year 2008. COVID-19 halted a residential market in UK after country's
government stopped the house viewings and protected the real estate agent from promoting the
new properties as the part of the broader moves for containing the spread of pandemic. Though,
future prices of house would depend on the time period for which this pandemic lasts but the
analysts are very much confident that lower rate of interest and the shortage of supply would
limit their decrease or fall. The novel coronavirus seems to have the long run implication for all
aspects of residential property (Than-Thi, Dong and Chen, 2019). As the restrictions are been
gradually lifted, sector started to operate again under the social distancing measures. A
significant recession might be seen in UK housing market as the consumer confidence would be
slow to the return. Although an official guideline allowed the construction sites for remaining as
open during the period of lock-down, but most of the large housebuilder had shut down because
of the difficulty in maintaining the social distancing. Halt in the construction is seen as inevitably
causing fall in delivery of the housing and number of the new builders sales this year.
According to the report, growth in the price of house stagnate in short term & price data
might fluctuate for some time period, as given lower number of the transactions are going
through. It has also been predicted a drop of 5% in the house this year and 5% rise in year 2021.
As the income and purchasing power of individual have decline, this results to decrease in the
prices of houses individual would not prefer to spend such large amount (Tsai, 2018). Moreover,
it leads to decline in the prices of constructing house as factors of production will not be
available. Housing market of Britain has faced a deep freeze by the measures for slowing down
the spread of COCID-19 and is not likely to recover. Further, its has also been represented that
rental pricing will lower down so individual would not prefer to buy houses and seeks for living
in the rental property.
The property market in UK has largely been reopened, but the experts believes that price
of houses would be falling this year as the economic uncertainty continues in wake of

coronavirus outbreak. It has been likely to seen that in the future prices of houses would be
fluctuating on a significant basis. An expert across a board expected that the property market to
take a hit this year and would bounce back in the future periods on a quick basis (Cochrane and
Poot, 2019). Different individual predicted the price differently as Knight Frank predicted drop
of 3% this year and increase of 5% in the year 2021.
CONCLUSION
The above report concludes that over the period of 10 year the price of housing market
has increased because of various economic factors that is interest rate, unemployment rate,
income, economic growth, population etc. This shows that in the past years there were many
causes due to which the price of the housing market has increased and this results to increase in
the demand of the house by the individual. There were several supplies related factors like price
of the substitute goods, number of the suppliers etc. which induces the housing market to grow.

REFERENCES
Books and journal
Al-Masum, M. A. and Lee, C. L., 2019. Modelling housing prices and market fundamentals:
evidence from the Sydney housing market. International Journal of Housing Markets and
Analysis.
Apergis, N. and Payne, J. E., 2020. Florida metropolitan housing markets: examining club
convergence and geographical market segmentation. Journal of Housing Research. pp.1-19.
Ball, M., 2017. Housing policy and economic power: the political economy of owner
occupation (Vol. 828). Routledge.
Banyte, J. and Maliene, V., 2017. Analysis of Factors Influencing Property Market Dynamics in
the UK (No. eres2017_335). European Real Estate Society (ERES).
Brener, A., 2020. Housing and Financial Stability: Mortgage Lending and Macroprudential
Policy in the UK and US. Routledge.
Chuang, M. C. and et.al., 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.
Cochrane, W. and Poot, J., 2019. The Effects of Immigration on Local Housing Markets (No.
19/07).
Hwang, S., Cho, Y. and Shin, J., 2019. Household Overconfidence in the UK Housing Market:
With Respect to Signals About Stock Market, Consumption, and Human
Capital. Consumption, and Human Capital (October 4, 2019).
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.
Savva, C. S., 2018. Factors Affecting Housing Prices: International Evidence. Cyprus Economic
Policy Review. 12(2). pp.87-96.
Sulaiman, N., Mohammed, M. I. and Ghani, Z. A., 2018. Factors Influencing Reverse Mortgage
(RM) Product Market. Advanced Science Letters. 24(6). pp.4623-4625.
Than-Thi, H., Dong, M. C. and Chen, C. W., 2019, January. Bayesian modelling structural
changes on Housing Price Dynamics. In International Conference of the Thailand
Econometrics Society (pp. 83-104). Springer, Cham.

Tsai, I. C., 2018. House price convergence in euro zone and non-euro zone countries. Economic
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Online
Housing Policies in the United Kingdom, Switzerland, and the United States. 2016. [Online].
Available Through:<https://www.adb.org/sites/default/files/publication/183139/adbi-
wp569.pdf>.