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The Global Financial Crisis: Impact on Property Markets in the UK - Dissertation Example

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This study seeks to establish the impact of the global financial crisis on the UK property markets. A background on property companies in terms of their financial management aspects and strategies during the financial crisis will be undertaken while analysing their effectiveness and lessons learnt. …
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The Global Financial Crisis: Impact on Property Markets in the UK
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Download file to see previous pages ............. 14 3.1 UK Property Markets before the Global Economic Crisis …………………… 14 3.2 Impact of the Global Economic Crisis on UK Property Markets: Credit Facilities…………………………………………………………………………… 16 3.3 Impact on Investor Confidence, Housing Wealth and Consumption ………… 17 3.4 Overall Impacts on the UK Property Markets ………………………………... 20 3.5 Conclusion and Implications of Literature Review ………………………….. 23 4.0 Analysis ……………………………………………………………………………..... 25 5.0 Conclusion ……………………………………………………………………………. 38 References ………………………………………………………………………………… 41 Appendices …………………………………………………………………………...…… 44 1.0 Introduction The recent global financial crisis had far reaching effects to all aspects of life- socio-political and economic. One of the most affected areas of the economy was the property markets. In the UK, the economic crisis and its accompanied heightened unemployment, job insecurity and tight lending criteria synergistically combined to undermine confidence in the properties market. The overall effect of this was a downward correction of unimaginable and un-forecast levels, with house prices falling from the observed pre-crisis growth to severe confidence-destroying contraction at the height of the crisis. This study seeks to establish the impact of the global financial crisis on the UK property markets. A background on (15) property companies in terms of their financial management aspects and strategies...
This dissertation overviews the UK property market that had experienced a period of immense growth just before the global economic crisis. Representative figures of the housing market within the last one and a half decades indicate that house prices had grown by more than 100% between December 1999 and December 2007. This growth is attributed to a number of factors; the low interest rates charged alongside the high employment levels in the UK combined with constraints in housing supply and large scale availability of credit. In a manner unobserved before, it was easier to own property in the UK, with non-stringent lending criteria and a wide range of mortgage products availing ownership opportunities to the wider population and thus creating a housing boom. In this situation, only slight dips were in the cards rather than the massive fall that created a property crisis in the UK. Initial subtle slumps in housing prices began to show in the early months of 2007, dismissed as seasonal only to significantly correct in the months of November. Housing prices contracted for consecutive months between late 2007 and 2008, ultimately surpassing levels from previous property crashes. Adair, Parsa and Grissom discuss the complex interaction between property markets and the economic crisis in terms of their contributions to each other. The authors argue that while the crisis incapacitated the housing market, the pre-existing giant overhangs of real estate loans that were largely under the control of the most affected UK banks imply that negative consequences on refinancing are likely to occur. ...Download file to see next pagesRead More
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