The state of the real estate market in UK (2010) - Assignment Example

More and more real estate developers and investors are pessimistic about Britain. They are of the opinion that fast recovery in the near future is not at all evident. Every body is recommending the investors not to invest in Britain. Industry pundits point out about the sorry picture of real estate markets in UK. They say that investment in the yield generating properties in UK is similar like purchasing a bond that is unlinked to inflation and which yields around 7%. Therefore it is not necessary to go to UK for that.

Bonds can be purchased from other countries that yield mare than that. Even prime locations in UK including London don’t attract big investors in real estate now (Rochvarger.2009). In UK the economic situation has declined over the years due the after effect of the financial crisis. The rate of unemployment is higher and industrial production has gone down. All these factors have influenced the real estate markets severely. Many borrowers have failed to pay or defaulted in their mortgages. This has resulted in forced sales of large number of properties at declining prices.

As a result of increased sales, the supply side is on the high. This has resulted in a steep decline in prices because of no supplementary increase in demand. Another important factor that has negatively affected the real estate market in UK is the state of the currency market. . The current situation in the UK real estate market has made it a buyers market rather than sellers market. Sellers’ often tend to lose their money through real estate transactions. People are taking their own time now to find the right property for them in the UK market.

Although the number of buyers is limited or few, they are offered a wide choice where the prices are low and are really negotiable. Moreover the drop of pound against euro has definitely made an effect on the UK buyers of properties (Latest news from the Languedoc. 2009). The real estate market in UK includes buying and selling of properties and letting of dwellings as well as other related business support activities. In 2006, the gross value in this sector amounted to 83037 million pounds. The property market in UK boomed till 2008 when the great financial crisis hit the economy.

The increase was due to variety of reasons ranging from low interest rates, growth in credit and economic growth, high employment, foreign investments and planning restrictions on new housing. All these upward levels came down since 2008. Currently the market does not show any kinds of positive signs even though other European real estate markets in France and some Scandinavian countries have shown signs of revival (UK Economy. 2011). UK Economy, UK Economic Profile, British Economy, United Kingdom Economy, Even though the real estate markets have shown a downwards trend since 2008, no real boosting measures for the sector was put forward by the government.

Recently the chancellor announced 100 million pound assistance for filling potholes in his budget but little allocation was made to the housing and