• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

UK Housing Market

Extracts from this document...

Introduction

The UK Housing Market Saidul Amin 12LT To what extent do factors related to the housing market actually affect supply and demand of houses, and in turn, house prices? The housing market is a very large market in the U.K. It is also a very important market, as it can change the lives of many people living in the U.K and possibly even other countries. If house prices were to suddenly fluctuate, this could mean profit for some, however this could mean a total disaster for others, especially those who may be looking to get onto the "property ladder" and buy their first home/flat. There are many factors which influence the housing market in the UK. These can be split up into two main categories; demand and supply of houses. The term demand means "the want or desire to possess a good or service with the necessary goods, services, or financial instruments necessary to make a legal transaction for those goods or services." Demand can increase if there is an increase in real income, as people would have more money to spend as they are earning more, therefore more people could afford houses. However if inflation was to increase then people would not necessarily be any better off to buy more houses or bigger houses, as house prices would also increase. If interest rates were to decrease then this would increase demand as this would reduce the cost of having a mortgage. ...read more.

Middle

Opportunity costs for builders will have an affect on supply in the housing market, as a decision will need to be made to see if the builders can be used in a more profitable way for the money, therefore this can contribute to a lack of houses being supplied as there are more important jobs to be done, e.g. better investments, and making better use of the land. The most important factor in the UK housing market could be said to be the ability to be able to buy a house. This can be reflected in a person's mortgage. A mortgage is a "loan to finance the purchase of real estate, usually with specified payment periods and interest rates." It is quite rare to see people buy houses fully from their initial savings. In this case a loan needs to be taken out from a bank or building society. Before the 1980's these were only available in building societies however you can now take mortgages from your bank. Below is a chart showing the amount of loans taken out for house purchases. It shows a general increase in the amount of loans taken out to secure a house, however there is a drop in 1992 where it seems to reach it trough. This could be due to high interest rates which would have put people off from buying a house, or due to the removal of a policy called MIRAS which I will discuss later. ...read more.

Conclusion

The Abbey National recently said it would lend 5 times a borrowers salary. Banks are also considering mortgages over a longer period. This increased generosity in lending has helped to keep the market buoyant without addressing the underlying problem of overvalued house prices. And the arguments for the rise in house prices are: Rising Price of Renting. With the price of renting rising as well, it still makes sense for people to borrow as much as they can to get on the housing market. More Flexible Mortgage Lending New longer more flexible mortgages means people can still afford the mortgage interest payment. In conclusion it can be said that many factors cause a increase in demand in the Housing Market in the UK, however there is just simply not enough supply for this demand to be met due to such a high increase in each of the above factors stated, e.g. divorce rates. I do not think that equilibrium will be reached with demand and supply of housing in the UK, and therefore the prices of houses will alter and overall, increase in the short- term e.g. next five years, however beyond then, it will take a steep fall as there may be more alternatives or even cheaper alternatives to buying, and also more opportunities may come up, e.g. universities accepting students for more than one year at campus. This change will be similar to the incident in Japan in 1991 where house prices were very high and since have been falling consistently. Reference to further sites * http://www.lendingpartners.com * http://economics.about.com * http://www.uk-houseprices.co.uk * http://www.mortgageguideuk.co.uk/housing/house-price-fall.html ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Marketing & Research essays

  1. The importance of having a business plan and the factors that can affect it.

    By committing your opinions to paper, you can be aware of your business better and also chart particular courses of action that need to be taken to improve your business. A plan can point alternative future prospect scenarios and set detailed objectives and goals along with the resources required to achieve these goals.

  2. Foreign Direct Investments

    To create an attractive and favorable investment climate in all spheres furnishing them with stabile and predictable conditions for performing business transactions. 2. To lessen the risks of foreign and domestic investments flows-obliterating tax and other administrative barriers. 3. To engage MNCs in order to boost the role of Armenian economy in globalizing world economy.

  1. business planning unit 8

    It cannot offer its shares or debentures to the public and their transfer is restricted. A private limited company is treated as a legal entity. The reason I decided to start up a private limited company was because private limited companies are easy and inexpensive to set up.

  2. Applied Business Studies

    Some of the things that a business has to do as a sole trader is make annual self assessed tax returns by yourself, as it's the role of a manager should complete it as it requires details of the businesses profits and outflows for the past year.

  1. Aravind Eye Hospital - Case

    Wrote Dr. V: Many people often ask me: What made me take up a task of such magnitude at the age of 58? I guess I drew my inspiration from the legacy of our great forefathers... Besides, there were inspirational leaders like Mahatma Gandhi and Sri Aurobindo whose philosophy and way of life influenced many.

  2. Impact on Automobile Industry Due To Recession in India

    Now you should be able to determine the difference between a recession and a depression without resorting to the poor humor of the dismal scientists. Recession Definition Many professionals and experts around the world believe that a true economic recession can only be confirmed if GDP (Gross Domestic Product)

  1. unit 1 market proposal

    Marketing objectives is an important part of a marketing plan. Without clear objectives it is difficult to say what your marketing plan is trying to achieve or if it is going to be successful. These objectives have to be co-ordinated to be achieved.

  2. SunCity - developing marketing strategy for problem

    There is also factual information to say that there are in fact benefits of using sunbeds which Sun City does not use to its advantage, I will therefore come up with suitable recommendations to help Sun City. Without counteracting the negative media with positive facts Sun City will eventually lose

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work