Contemporary Business Environment: UK Housing Market Report

This report provides a comprehensive analysis of the UK housing market from 2009 to 2019. It begins with an introduction to the business environment and the specific context of the UK housing market, highlighting key changes and factors influencing the market. The main body of the report delves into the fluctuations in average housing prices, exploring the economic determinants that drive these changes, including factors such as economic conditions, income levels, demand, and supply. The report also examines the impact of government actions during the period, including the effects of Brexit and other policies. Furthermore, it assesses the consequences of the Covid-19 pandemic on the UK housing market. The report concludes by summarizing the key findings and providing references to support the analysis.

Report
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Change in the Average Price in United Kingdom Housing Market............................................3
Economic Determinants of the Changes in Housing Market United Kingdom..........................5
How has government actions over the period of 2009-2019 affected UK housing market........7
Impacts of Covid-19 on UK housing market...............................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
Business environment is considered as process where different factors related to to the
organization are studied in order to evaluate their impact on the business of an organization or
complete market. There are various factors are considered in the study of business environment
that can help the organization to effectively improve the business of organization in target
market. This report is about housing market in UK (Zhang, 2019). There are various changes are
faced by UK housing market since 2009 to the current time. There are various changes occurred
from 2009 to current situations in the housing market. Major changes in the price within the
housing market will be analyzed in report. Change in demand and supply within housing market
will be evaluated for last decade in UK housing market. Changes in the pricing will be evaluated
for last 10 years in UK housing market. The impact of government decision on the government
decision will be evaluated on the housing market and changes that are occurred in housing
market of UK. The impact of various factor also will be analyzed on UK housing market. The
impact of Covid 19 Pandemic also will be analyzed in report.
MAIN BODY
Change in the Average Price in United Kingdom Housing Market
For the market place 10 years can be considered as long time and within this time a business
sector can face revolutionary changes. Housing sector is one of important market sector that has
face sever changes in past 10 years. There are various changes are faced by UK housing market
which are directly connected to the demand and supply of houses in housing market. These
changes are mainly changes due to major changes in the market sector. There are various factors
can affect the price in the housing market since 2009 and continuously affected the housing
market. Some of major factor that can affect the price of Houses in housing market. Some of the
main factors are economic condition of country, average income of buyer. Demand of housing
and available housing resources (Bramley and Fitzpatrick, 2018). These are major factors are
need to understand in order to analyse the change in the average price of housing in UK in last
10 years. major fall in the housing market is recorded in the last decade that is related to the
financial crash, it has affected the housing market. Largest drop in the housing price was
recorded in year 2009 with 7.0 % annual fall. Inflation rate recorded with 1.5 % in UK in April
and it was recorded 1.2 % in month of May. There is increase in the average price in housing
market was recorded till year 2016. This increase was due the election in country. It has
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increases the demand of housing in year 2015 and 2016. In year 2018 average price in the
housing market reached to 232000 Euros. Which was considered as peak change in the housing
cost in UK housing market. as per the report of ONS the inflation in the Housing cost is steady in
overall last decade (Kim and Chung, 2017). The changes in the price of the housing market is
constant and it is important for the government to considered the change in inflation rate in order
to understand the changes in average price changes in housing market of United Kingdom. As
per the data of house price inflation from 2009 to 2019 changes are highly frequent.
Housing market has faced major fall in the inflation rate in the starting of year 2007 and it
continues to fall till 2009. After 2009 the inflation in the price of housing market recorded
increase and the rise in the housing price inflation was continued till year 2010 end. Again
Housing sector has faced fall in the housing cost Inflation till 2011 to 13 and again in year 2014
inflation in housing market has taken peak in year 2014. The inflation in the price of the housing
was more than 10 % in year 2014. After year 2014 there is continuous fall has been recorded till
2019 ad certain rise was recorded in the 2017 – 18. This is how the inflation in the housing price
has changes for last decade due to change in the demand and supply in the housing sector from
2009 to 2019.
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Economic Determinants of the Changes in Housing Market United Kingdom
There are different factors are affecting price with in housing market. These factors sometimes
affect the pricing by direct or indirect manner. Most of time this factors are classified in three
different categories which are supply side factors, demand side factors and other factors. The
factors that are included in supply side are- numbers selling and new builds. These are
considered by the supply side factors. The other factors that are included in demand side are-
affordability of house and speculative demand (Brener, 2020). There are some factors are
considered in other factors which are- interest rate, economic growth, number of households and
availability of mortgages. These are major factors that can lead the changes in the pricing in the
housing market of UK. There are some other factors are also there that are need to the considered
in order to understand the change in the pricing of housing in United Kingdom.
Main factors that are considered in the demand factor is relate to the affordability of
house. The affordability of the house can be directly related to the rise in the income of the
people. The rise in the income can be considered as increment in the ability of the individual to
buy a new house. The ratio between the rise in income of people and rise in the prices of housing
sector is most important. This ratio is need to be considered in order to understand the
affordability of the houses in the housing market. For the first time buyer this issue become more
crucial. They have to consider various things in order to buy a new house. If the rise in income is
low and hike in price is more than the hike in income can reduce the affordability of houses.
From this relation it can be explained that how the change or rrise in income can increase the
demand in the housing market in United Kingdom. The main factor in the demand is related to
the affordability of housing which is directly based on the rise in the income of people who lives
in United Kingdom and interested to buy housing or looking for renting house.
Interest rates in the housing are mainly considered by the people in order to learn more about the
willingness of first time to buy the houses. This is important for the buyer to consider the interest
rate in the housing loans. If the interest rate of house loans is too high then it can made people to
avoid investment in the housing market. When the interest rates in the housing market are low
then people more likely to show interest in the housing market. Small changes in the interest can
change the mind of the people (Bracke and Tenreyro, 2020). This small differ in the interest in
the housing loan can provide larger benefits to the people. This is how people looks for fall in the
interest rates that can help them to buy houses with in low cost. It is how demand of the houses
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or price change in the housing market is affected by interest rate because change in interest
changes the price customer have to pay.
Customer confidence is also crucial factor in the housing market and demand within the
housing market. This can be directly connected to the economic stability in UK and stability in
the price in the housing sector. Stability is most important for the housing market. Through this
process people make long term investment in the housing sector. They use to consider various
factors that can help them to evaluate the safety in the housing market. For example Brexit has
added huge uncertainty in the UK economy. This instability has lead the investors to reduce the
investment in the housing sector. This is major challenge that is faced by the people in housing
market.
Houses Population is major factor that can affect the prices in the housing sector. Hike in
the population can affect the availability of houses in the location. This can increase the demand
of houses in market place. Rise in the population increase the demand in housing sector. If the
availability of houses is less than the demand of the houses then it ill increase the price of the
houses in the housing sector. With the rise in the population due to migration and other factors
has increased the cost of houses in UK. This is major factor that is need to be considered in to
understand in the change in the price of houses in housing market. The other factor that is
considered in the price of in the housing market. This is important to consider the hike in renting
in United Kingdom. This is most important to consider in order to understand the change on the
price with in housing sector. The cost of house renting is continuously increasing and it is
continuously increasing since 2005 and still it is increasing. On general basis 22 % increment in
the house renting cost has been recorded. These are various other factors are need to be
considered in order to understand the change in price of housing market. Economic growth also
can increase the price of the houses in local housing sector. Number or households is related to
the population of country. Large population increase the demand of houses in country and it also
can increase the cost of houses in UK. Number of new build houses also can affect the price of
houses because if the number of new build houses is low than it can increase the demand in
housing market and the supply remains low. This is how the prices of the houses can be increases
with the increase in the number of households.
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How has government actions over the period of 2009-2019 affected UK housing market
In the context of housing market of the UK it can be said that now it is slowing down after
Covid-19. There is a decline of approximate 1.8 million sales of housing. It is now known as the
weakest point since the global. In the context of house prices it is stated that it is being set to leap
by another 50% of in coming decade and it is reaching around £419000 on average across the
UK in up to 2025. In the context of London, an average house prices which are being estimated
to be worth of £931000 in 10 years (UK Housing Market at its Weakest Point in a Decade,
2019).
As per one report it is identified that fewer houses were sold in the UK in the first half of the
year of 2019 than the first half of 2009. After rapid inflation, houses prices fallen down in
London. In this regard it is stated that this rate of fallen of houses was around 32%. Not only
commercial but also residential property sales fallen down after Brexit and the year of 2016. In
the context of actions of the government it is stated that it delayed the scheduled date of Brexit to
31st October because of uncertainty in prices and demand of housing which dampening the
prospects of a short term of increase in demands for property (Adams, 2020). So, it can be said
that the government has taken effective steps in increasing demand for property. But still there is
requirement of making changes in strategies and taking effective steps for increasing demand for
housing otherwise it can affect economy of the UK in a negative manner. Some reports show that
the government has not taken effective steps and actions against housing. It is recommended to
the government of the UK that needs to take extra efforts and consider all factors related to
housing as why housing prices have been fallen down and how it can be improved and how
demand of housing can be improved. After focusing on all these areas by the government it can
be said that UK property remained attractive to investors from abroad as return from financial
assets like binds were declining. In addition it is also stated that financial costs of this also have
been fallen because major central banks cut interest rates. So, it can be suggested that company
should focus on all these areas for improving (Best and Kleven, 2018).
But now after Covid-19 it is estimated that prices of housing will be fallen down and it is
creating new set of challenges. As per the reports it is also identified that Covid 19 has affected
on property market confidence and this lack of confidence in housing market is growing. It has
also carried out transactions of a higher total value in the past quarter than the preceding 12
months.
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Impacts of Covid-19 on UK housing market
Covid 19 has great effects on the housing market. It is stated that after this climate
changes and Covid-19. British people in the middle of buying property can still move. It is
unlikely to have recovered year from now. It is also stated that since the start of 2020 year house
prices as well as related activities had been picking up since the start of 2020. As compared to
Brexit and political instability it can be said that this trend of housing gone sharply into reverse
(Corona Virus Brings UK Housing Market to Near Standstill, 2020).
One of the main reasons of decline and fallen down of this market is because of
lockdown. Due to lockdown, agents close their doors and this situation has lead several changes
and it can be compared with financial crisis which occurred in the year of 2008-2009. Those
people who can afford to move easily they may lack confidence in this housing market. But there
are several ways by which situations can be changed out as stamp duty which also known as
property purchase tax holidays is one of the best examples or ways to reactivate housing market
in a quick manner as a shirt term measures. But still it can be said that after falling down of
prices of housing still there are several people who cannot afford properties. Real housing prices
and rents have fallen down yet people of middle income cannot afford it. So, overall it can be
said that people of higher income can only afford housing after falling down of prices.
Due to covid 19 there has been a great negative impact on all sectors. But usually in UK
housing sector is affected adversely. This is because of decrease in income of people and
economic growth of country. Thus, people are not able to pay or buy houses. It has affected on
their saving as well. Apart from it, demand of houses are decline as people are not having
purchasing power to buy house. So, if there is no demand then there is no supply of houses. The
gap between it has increased and created imbalance between it. In addition, there is shift in
economic determinant as well. This has led to bring shift in demand of houses. However, these
determinant occurred in economy and impacted on housing industry.
There are different factors regarding Covid 19 can affect the housing market and it also
can force the housing sector to increase the cost of houses in the market place. Main changes are
related to the design of houses that will be demanded by the people after the pandemic. People
will ask for house that are designed with the consideration of avoiding this kind of infectious
disease. NE demands of the customers will be related to the the social distancing concepts. The
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considerations also will be based on the concept of change in the lifestyle of people due the
pandemic. This is how some changes can be predicted about housing market due to Covid 19.
It is identified that economic determinant of change are those which occurs within economy. Due
to it there is high impact on supply and demand of products. With shift or change in determinant
it affect on housing industry. Similarly, in UK the economic factors which are as Affordability-
this is a factor in which shift change it. When there is rise in income level of people it allows in
rise in demand of affordable house. During economic growth there is rise in demand of house.
Thus, when income rises there is high rise in demand of house. Thus, in UK during 2012 the
demand increased. It was due to economic shift in income level. Thus affordability was risen
CONCLUSION
The above study is providing complete over view of housing market in United Kingdom
and various factor that are related to the change in the price of houses and rent in UK market.
Complete over view of the housing sector has been provided in the report that can be considered
in order to know more about the change in the housing market since 2009. The influence of the
government and their decisions also has been evaluated in the report. various determinants in the
housing market has been analysed in report. the impact of Covid 19 will be analysed for the
change in the cost of housing market in UK.
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REFERENCES
Books and journals
Adams, P., 2020. UK Housing Market Expected to Make Modest Gains in Next Six
Years. Energy.
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.
Bracke, P. and Tenreyro, S., 2020. History dependence in the housing market.
Bramley, G. and Fitzpatrick, S., 2018. Homelessness in the UK: who is most at risk?. Housing
Studies. 33(1). pp.96-116.
Brener, A., 2020. Housing and Financial Stability: Mortgage Lending and Macroprudential
Policy in the UK and US. Routledge.
Kim, J.R. and Chung, K., 2017. Developing a Regime-Switching Present Value Model: An
Application to the UK Housing Market. Available at SSRN 2959248.
Zhang, X., 2019. Essays on the housing market, foreign investment, and the stock market:
evidence in the UK, Canada, and China (Doctoral dissertation, University of
Portsmouth).
Online
UK Housing Market at its Weakest Point in a Decade. 2019. [Online]. Available through
<https://www.theguardian.com/business/2019/aug/08/uk-housing-market-at-its-weakest-
point-in-a-decade-brexit-says-savills>
Corona Virus Brings UK Housing Market to Near Standstill. 2020. [Online]. Available through <
https://realty.economictimes.indiatimes.com/news/industry/coronavirus-brings-uk-
housing-market-to-near-standstill-rics/75072418>
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