Factors Affecting the UK Property Market - Essay Example

Describe the current of the UK property market and the factors affecting it Essay Paper September 5, 1000 Words Current State of the UK Property Market The current state of the property market pertaining to United Kingdom still reflects a sluggish picture. It is observed that during the month of May in 2011 the prices of the housing properties in the region showed a very gradual rise by only 0.3 percent in comparison to the previous month. However such rise when compared to the previous year reflected a decline by around 1.2 percent. In qualitative terms the sales situation relating to housing and commercial property market in the region reflect a point of stagnation where only 66,000 houses were found to have been sold during the month of April. During March 2011 the number of houses sold stood at only 65,000. However the above figure when compared to the sales figure of April 2010 reflected a fall by around 6,000 units. 1 During the month of June the housing market of United Kingdom reflected a decline by around 1.5 percent which is recorded as one of the highest declines since the period of August 2009 in the region. Further records show that the average price of the housing properties in the national context declined by around 1 percent for which in terms of value the average price of a house in the region stood at £165, 738. 2 Analysts further state that the market for housing property in United Kingdom is already overpriced for which it is held to crash at the near future. It is observed that the number of applications for mortgages is tending to go down in the post-recession periods, first buyers contributing in around 20 percent of the total set. 34 Statistical records reflect that the annual changes in the prices for houses in United Kingdom gains a negative growth of around 3.29 percent. Similarly the change in the housing market prices for the quarterly period ranging from January to March, 2012 also reflects a negative growth rate of around 0.66 percent. Deceleration in the growth rate both at the quarterly and annual level reflects the recent bleak picture of the housing market in United Kingdom. 56 Forecasts made by financial and housing property experts reflect that though in the future the average prices for the houses in United Kingdom is expected to counter a brief rise however with a simultaneous rise in the inflationary situation, the value of the housing market in real terms is held to suffer a decline. 7 Factors Affecting the UK Property Market One of the major factors that tend to affect the property market of United Kingdom is the undue rationing of the mortgage funds by the lenders. Borrowing situation for housing property funds in the region are continually affected owing to the dwindling economic situation of the country and also because of rising unemployment levels. The seller groups of housing properties in United Kingdom are also expecting a rise in the housing property prices which in turn would affect the situation of market demand for the same. 8 On the other hand, fall in the prices of houses related to United Kingdom owes to the reduction or abolishment of stamp duty levied on procurement activities of housing properties for first time buyers in the region. However in the present times though the stamp duty abolished for the first time procurers of housing property has again been set in yet it is held that prices related to the same would go on declining by around 2 to 10 percent. This decline in the prices of the houses in the region happens to discourage the seller groups from selling their properties thereby affecting the market supply situation for housing properties. 910 The housing market of United Kingdom is found to be rigged off by existing property buyers rendering potential obstructions to the entry of new buying population in the market. Again the bank rate in United Kingdom has also come down from 5 percent to only 0.5 percent in the light of the growing inflationary movement thereby reducing the financial potential in individual hands to procure housing properties. Existence of a cautious lending market related to housing property loans has made the matter worse for the new purchasers. It acts as a vicious circle draining on the national economy and the opportunities of the people seeking to procure a house in United Kingdom. 1112 The major factors that tend to affect the property market pertaining to United Kingdom are the weak economic conditions of the region coupled with an inflationary market trend. Inflationary market movements also happen to restrict the banks from approving housing loans thereby creating a fall in demand for housing properties. Similarly the decline in the employment growth in the country with a fall in the labour market also tends to largely affect the demand for housing property in the region. The fear rendered in the minds of the buyers of such housing property owing to the vicious effect of the above conditions in turn significantly affects the market growth and sustainability of the United Kingdom property market. 1314 Reference List BBC News, ‘UK house prices: January-March 2012’, BBC [Web Page] (2012) , accessed 5th September, 2012 BBC News: Business, ‘Housing market still lacklustre, Nationwide says’, BBC [Web Page] (2012) , accessed 5th September, 2012 Elliott, Larry, ‘House prices have nowhere to go but down’, The Guardian [Web Page] (2010) , accessed 5th September, 2012 Ferguson, James, ‘Dont be fooled - house prices will fall again’, MoneyWeek [Web Page] (2010) , accessed 5th September, 2012 Gammell, Kara, ‘House prices: What will 2012 mean for the housing market?’, The Telegraph [Web Page] (2011) < http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8956048/House-prices-What-will-2012-mean-for-the-housing-market.html>, accessed 5th September, 2012 Kuenzel, Robert and Bjørnbak, Birgitte, ‘The UK Housing Market: Anatomy of a house price boom’, ECFIN Country Focus [Online Journal], 5/11 (2008), 1-10 , accessed 5th September, 2012 Mechan, James, ‘UK House Prices fall by 1.5%’, The Market Oracle [Web Page] (2012) , accessed 5th September, 2012 Stephens, Mark, ‘Tackling housing market volatility in the UK’, Joseph Rowntree Foundation [Web Page] (2011) , accessed 5th September, 2012 Walayat, Nadeem, ‘UK Housing Market Heading for a Property Crash’, The Market Oracle [Web Page] (2007) < http://www.marketoracle.co.uk/Article902.html>, accessed 5th September, 2012 Wall, Emma, ‘Surprise house price rise in August not indicative of market, says Nationwide’, The Telegraph [Web Page] (2012) < http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9511052/Surprise-house-price-rise-in-August-not-indicative-of-market-says-Nationwide.html>, accessed 5th September, 2012 Read More