Evaluate the prospects for the property and construction markets in the East Midlandsin 2003.

Evaluate the prospects for the property and construction markets in the East Midlands in 2003

This report will contain the background information about the East Midlands, the current property prices in the East Midlands, current prices comparisons, trends in property prices, annual increase comparisons, annual increase in property prices, number of properties sold, average sales price and also the overall economic conditions.

The East Midlands has a population of 4.2 million people, this is about 7% of the UK’s total. The regions population keeps on increasing since 1981 to 3.9 million which is a rise of 7.6%. The East Midlands covers 12% of England’s total land area. Roughly 80% of the East Midlands is rural. Over the years more houses, apartments have been built in the East Midlands and individuals continue buying properties whether it’s for personal or investment use. The number of houses sold at the end of year 2000 approximately was 2,600 £1million in England and Wales.

The current property price in the East Midlands depends on the individual house. The actually sale price very much depends on the factors such as the size of the property, or particular areas within East Midlands may be more desirable and expensive than others.

Figure two

As you can see in figure two, all varies on the specific property. The detached house is far more expensive then any other type of house because it has no neighbours to disturb ones privacy unlike the semi-detached, flats etc…

Looking at the overall average price in National regions near East Midlands in figure three; it might appear as the standard is not as high, except bear in mind that London, South East etc… have a much greater advantage of land usage, population rate, higher wages and many more property developments. The most expensive counties in which to live are Greater London, Surrey, Berkshire and Hertfordshire, South Humberside and South Yorkshire are the cheapest. These match the statistics on £1 million sales, but what is perhaps more interesting is that although London is the most expensive area, its price have not rose as fast as some other areas since 1987.

“The UK house prices are continuing to rise, according to the latest report from the Halifax”. East Midlands prices rising by 38% over the last year. The average property price in East Midlands has now breached the £100,000 mark. Halifax sugguests in another 50 years or so, the average house price will hit £1 million. If property prices increase by 4.5% over the next 50 years. But in London the barrier might be broken sooner – in 2039. Our grandchildren might have a huge mortgage on their shoulders.

Figure three

The trends in property ...

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Figure three

The trends in property prices in East Midlands (figure four) as a whole have increased since the 1995, although in many areas had a very slow start the majority picked up from mid 1996. Again in1999 many areas showed a sharp increase. Over the eight years it shows that the trends has never really fallen, it’s always increase by at least £4,000. But will the trends keep up in years 2003? Lending for house purchases grew by 20% in 2002. This is due to sharp house prices boost and the rise in sales up 1.6 million and mortgages lending for houses purchases up 20% to £120billion. With just £135,000 new homes completed in 2002, around 3% up in 2001. Planning delays, labour shortage and limited land appears to have been the constraints for the coming year.

Figure four

The prices have changed intensely compared with other regions (figure five). Comparing with the neighbouring areas it’s in the top three. Not even London has boosted up their prices as high as the East or West Midlands. The house price inflation rate is 25.3% reaching the highest level since the late eighties. Around 10-15% of the growth was justified by improved economic conditions – including higher employment, real disposable earnings growth and falling real mortgage rates. However, the market was boosted by around 10% by encouraging buyers to increase their demands for housing and borrow more to do so.

Figure five

Employment in the East Midlands or anywhere does affect the population in the region. If jobs are not available in or around the city, the region can not accept others to live their. This is why Greater London has an extremely high population rate. Figure six shows a table of economically active employment and economically inactive employment.

Figure six – Economic Position of Resident Aged 16 and over in the East Midlands

One third of employment in the rural areas of the East Midlands is a part time, vaguely higher proportion than both the regional and national average. Unemployment rate is the highest in Bassetlaw, Newark and Sherwood in Nottinghamshire, reflecting the effect of coal mine closure.

Agriculture is still the main land use in the east Midlands, nearly 80% by area compared with 72% for England as a whole. The agricultural workforce accounts in (1997) for 46,915 people (1.5%), or 2.4% of those recorded as ‘economically active’. It’s as high as 6.8% in Lincolnshire.

Conclusion

The first time buyers are continuing to enter the market of properties, around 38% of buyers in March 2001 and helping to keep the market upbeat. The mortgage rates are still quite low and property market remains still very healthy. But looking at the overall prospects of the market and construction, individuals will try to achieve their dream home whether its buying a new home, moving region or building their own property. Property in the long run my slow down for a period of time but it’s an opportunity cost for others. The prices has gone up ridiculously over the years because of increase in job demands and so therefore individuals want to buy there own luxury house. Once the person is settled into a job and enjoys the town/city, one of there first priorities is to look for a house.

Developers have created a new and more expensive way of living in the city by introducing luxury apartments. These apartments for example, Nottingham - lace market apartment, are lot more expensive then buying a house and maintaining. But are these apartments worth around £120,000? It’s right in the city centre, no parking, street noise, pollution, no privacy etc… But these particular apartments are for the younger generations, who have jobs in the city centre (easy access). Also for short term contractors who will work in the city. These rental apartments in the lace market are around £500 per week. The market will always strive to achieve what they think is best for the public.

There will continuously be future of properties, whether it’s for young youth, old people homes, flats, apartments, private homes etc… The market and construction sector will try to keep up to date and modernise the East Midlands. A great example of modernisation is Nottingham’s ‘Corner house’. This would attract other individuals from other towns and cities to view the new development and hopefully move to the region or send their sons or daughters to University in the East Midlands. This would then increase the number of population in the East Midlands and most students have part-time jobs. Also, investors make a lot of money when students come on aboard because they need somewhere to live and why not a better place then private student accommodation.

The house prices will either remain at the level they are at now or they will keep on increasing slowly over the years. But for year 2003 the markets which we are in now the prices of houses still keep on rising. If the war breaks through with Iraq house price might just decrease slightly, but talks about price increase on talk shows suggested that property will increase once again this year (perhaps in middle of year 2003). It’s a great year for all those who are investing this year in properties and not so go for all those first time buyers (stamp duty).

Word count: 1527.