The influencing factors to the Current UK Housing Market .
There seems to be a general consensus among economists that house prices is one but an important variable in determining the direction that the national growth takes within a given economy at a given point in time…
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The national population size and its composition, urbanization, the level of economic prosperity, investor speculative activities, interventionist policies by the government, monetary policy systems, just to mention but a few, are among a host of dynamic influences that play significant roles in shaping housing markets both in developing and developed economies (Leamer, 2007). Given the fact that these factors affect housing markets in every country differently in terms of intensity and persistence, it is rather difficult to capture all of them in a macro modeling system applicable to all states (Meen, 2001). In fact, what holds in an industrialized nation’s context may or may not hold true for an emerging economy. As witnessed in the recent financial crisis whose causal determinant stemmed from speculations in the housing market, the intensity of speculative activities in this particular market differ across economies (Levin and Wright, 1997). The factors that influence the UK housing market are broadly categorized into two prospects; micro and macro-economic influences. Gross Domestic Product (GDP) as well as Gross National Product (GNP), the level of unemployment, rates of inflation, and rates of securing mortgages among other factors operating at the local level are classified as micro-economic influences. ...
However, the period after 2008 has been of tough decision making for investors in the housing market. The era of good times ended with a bust following the global credit crunch and has been worsened by the recent occurrences of the euro debt crisis and the double deep recession that has persisted to date with devastating losses for investors across markets, both locally and internationally. Initiated by the U.S. subprime mortgage credit crush late in 2007, the intensity of crisis spread fast and wide to the extent that by early 2008, almost very sector in the UK had felt the pinch. Indeed, the drifts that started at the beginning of the first half of 2008 had reached both the residential and other business investment markets by the end of the second quarter (Shiller, 2008). The initial government stimulus package was being whitewashed under the watch of every investor. As the fallout from the crisis gathered drive, the strengths of the labor market weakened almost dramatically, leading to significant increases in unemployment levels in every sector. Businesses had to survive whatever the costs and so sacrifices had to be made and the UK housing market was no exception. By 2009, news from the Office of National Statistics was not a surprise given the global economic performance; United Kingdom was officially in recession, having shed off 1.5 percent of its robustness in the fourth quarter of the previous year. A further drop of 2.5 percent at the close of the year further weakened the economy, causing a string of nightmares to investors (Office of National Statistics, 2009). At this point in time, unemployment levels had hit a new level high; 1.92 million,
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