Real Estate & Property: Valuation and Investment - Essay Example

Comments (1) Cite this document
Summary
In the paper “Real Estate & Property: Valuation and Investment” the author analyses a dramatic hike in the property prices noticed during 1998-2007. This has led to an increase in the equity of the existing property or house owners…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.1% of users find it useful
Real Estate & Property: Valuation and Investment
Read TextPreview

Extract of sample "Real Estate & Property: Valuation and Investment"

Download file to see previous pages This shows that the property prices rose three times more than its initial value. This growth remains consistent by approximately 11 percent every year. However, with the commencement of global recession, the property prices fell suddenly and significantly in UK. According to ONS, the average price of property fell to ?190,930, which represents a drop of 13.2 percent from the peak prices during 2007. In 2010, UK property prices started recovering and the average price increased to ?210,599 in the middle of 2012, but still the prices are 4 percent below what it was before the recession. So it can be depicted that boom and recession are integral part of the property market and they are bound to show the effects. Figure 1 States the Gross Domestic Product (GDP), the growth of the annual property prices, and the disposable income of the household. Since the property prices has followed the same pattern, so it rose in good times and fell in bad times. This also depicts that the volatility of the property prices depends on the economic cycle and it has a larger impact that the GDP or the household income. Figure 1: The Cyclic Pattern of Property Pricing in UK Source: (Office for National Statistics, 2012) This study aims at scrutinizing the UK property market, its current state and also the prospects of growth in the future. Keeping in mind the objective of the study a discussion on the effect of property prices on the economy, housing bubble, prices, mortgage and projections for future growth in this industry would be done. The pro-cyclic effect of property on the economy of UK led to an increase in the prices of the houses, which also increased the wealth of the homeowners in UK. That is why they felt less need of saving money and spending them. The increasing property prices also led to increasing demand for homes which further improved the economic condition and supported growth. Similarly the lending frequency of the property buyers would also increase, but sudden fall the prices would reverse the economic growth by affecting the whole cycle adversely. A significant mechanism by which the householders boosted their spending is through montage equity withdrawal. It was stated by Bank of England, as can be seen in Figure 2, that till the late 1980s, the mortgage equity withdrawal rate reached about 8 percent after calculating income tax. However, in 2003 the rates cross 8.5 percent. Throughout this period of time the householders were taking the advantage of increasing household prices. Though the government of UK preached of developing a saving culture in the country, but the households have already developed a different culture, which can be also called a borrowing culture. Figure 2: Mortgage Equity Withdrawal (% post Income Tax) Source: (Bank of England, 2007) Mortgage finance is one of the most important components in the property debt market. It was seen that by 2009, the household mortgage debt sector in UK amounted to ?1.53 trillion, among which about 78 percent of the debts were secured, which was about ?1.19 trillion. A comparative study with the other countries revealed that the household debt ratio of UK compared to the income was more since 2002, as can be seen in Figure 3. UK was renowned because of their high level of mortgage lending, which was showed as a percentage of their GDP (81 %). The concentration of the mortgages was mainly towards residential property than the business or personal property. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Real Estate & Property: Valuation and Investment Essay”, n.d.)
Retrieved from https://studentshare.org/business/1402806-real-estate-property-valuation-and-investment
(Real Estate & Property: Valuation and Investment Essay)
https://studentshare.org/business/1402806-real-estate-property-valuation-and-investment.
“Real Estate & Property: Valuation and Investment Essay”, n.d. https://studentshare.org/business/1402806-real-estate-property-valuation-and-investment.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
se
selina46 added comment 8 months ago
Student rated this paper as
The topic of "Real Estate & Property: Valuation and Investment" was impossible to find. I spent too much time to find it. Here at StudentShare, I got the most decent sample. Many thanks!

CHECK THESE SAMPLES OF Real Estate & Property: Valuation and Investment

QATARI DIAR Real Estate Investment Company

...?Running Head: QATARI DIAR Real E Investment Company QATARI DIAR Real E Investment Company Rooda Omran Al-Qebaisi MAC100 (Interactive Learning Skills and Communications 2) QATARI DIAR Real Estate Investment Company QATARI DIAR Real Estate Investment Company is one of the biggest Investment companies in Middle East. It was a creation of the state-owned Qatar Investment Authority in the year 2004 in Qatar. Salisbury (2010) reports, “Qatari Diar started work with one billion dollars in the development of the Chelsea Barracks and the former...
2 Pages(500 words)Essay

Real Estate Investment

...REAL E INVESTMENT Risk Profile Generating a Risk profile is an integral part of any financial investment process. It is in fact an overall part of the overall investment strategy, which is used by an investor to arrive at a decision. The present section will discuss about the assessment of the various risks that can affect the value of a real estate property in Italy. First & the foremost, the resent boom in real estate investment is due to the fact that there euro has been trading strongly in comparison to the dollar. This has also been attributed as one of the...
9 Pages(2250 words)Essay

Property valuation

...Introduction Property valuation is an exercise in itself. It has to take into consideration a number of factors ly, the location or area of the building, the facilities available in and around the building, proximity to various facilities like education, medical, entertainment, public transport facilities and other facilities. Then there is valuation based on the type of property: whether commercial or residential. Generally, for a given location, the valuation of commercial property is much higher than residential property. The profession and income levels of the residents also influence the value of a...
4 Pages(1000 words)Essay

Real Estate Business

...gave that the word real property coinage came from a Spanish word real which means a king it puts that all the land belonged to the king and the people using it had to pay taxes to the king for its use either directly or indirectly. Real estate has become one of the biggest aspects in recent times and owing to the ever increasing interests in private property ownership it is known as commercial real estate. The required substantial investment in real estates and the unique nature of each has necessitated the development of key distinct fields in...
14 Pages(3500 words)Essay

Real Estate Investment Trusts

...Compare and analyse REITS in 2007 against other forms of investment both property and non property related to determine how good an investment in REITS is. Executive summary Real Estate Investment Trusts (REITS) in the UK began operations effective from the first of January 2007 and right now have charted their own growth momentum path with an ever increasing investor portfolio of diverse dimensions. Property investment in the UK financial markets has changed considerably since then and this paper examines both corporate strategic dimensions and organizational structural...
30 Pages(7500 words)Research Paper

Property Rights and Estates (Finance Real Estate)

...DEFINITION OF E E is a term commonly used to describe a person’s total assets at a particular time, usually upon his death, which is prior to distribution through a trust or will. It is the sum of all types of property, real and personal, owned by an individual or an entity. In legalese, real property is real estate that denotes a piece of land, including the air above it and the ground below it, and things permanently affixed to the land, such as trees, fences, and any buildings or structures on it. In civil law systems, real property is termed as immovable property or immovables that...
6 Pages(1500 words)Essay

Residential Real estate property

..., and they would not think for the property value and others’ perspectives on behalf of the property value. Even though the price is going up, the GDP will support it. Thus, from the author’s perspectives, the demand is still high until the third year. However, after the above analysis, the author believes that Jakarta residential real estate price could go down when people start to realize that the price is not worth the property value. There is a high possibility that more people will start to think to live outside Jakarta, and only commute to Jakarta to go to their offices. When this happens, the growth will go down significantly to the normal level...
5 Pages(1250 words)Essay

Investment Valuation

...that can be subjected due to such redevelopment. Economic and financial aspects are considered in the valuation of the property and the general effect of the construction. The building being under construction and the first phase will be completed by mid-2015 while the rest by 2016. This enhances the determination of the maximum achievable rent and at the same time giving the actual value for selling the other part. The report vividly analyses journals and magazines from well established real estate companies as well as the use of quantitative and qualitative information gathering techniques were used. Moor Chambers Moor chambers is a mixed property use...
9 Pages(2250 words)Coursework

Real Life Real Estate Valuation and Appraisal

...and the unique nature of each has necessitated the development of key distinct fields in development of its industry (Rees, and Hayward, 2000) some of these are; Valuation and appraisal –services offered by experts in this sector Development –fixing or replacing investments such as buildings on land to increase its utility. Corporate real estate- achieving the goals of a corporation by managing its real estatesProperty management-controlling and organizing the functions of a real estate for a given party Brokerage- effecting or facilitating real estate...
13 Pages(3250 words)Research Paper

Managing Real Estate Investment

...strategy has to be chosen in such a way that it can achieve the best return on its investment in the new market. It must consider the risks of the new environment and determine whether this is consistent with its risk/return profile. Marks and Spencer has in the past adopted a naive rule for most of its international expansion projects. Franchising has been used as an entry mode into many international markets. The problem with this mode of entry is that it ignores the different culture and demand patterns that characterise different business environments. This approach has often been unsuccessful. The international franchise of Marks and Spencer operates approximately 200 stores in more than 300 countries. Given that...
8 Pages(2000 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Real Estate & Property: Valuation and Investment for FREE!

Contact Us