The Housing Market in the UK - Essay Example

Housing Market in the UK: A Serious Analyzing Housing Market in the UK: A Serious Analyzing There is truly no doubt that the housingmarket in the UK has slowed considerably, especially since that of recent years in particular; however nonetheless, the fact still remains that prices are almost double their level at the turn of the millennium, and thus, in regards to this, we are some incredibly past their 1989 peak relative to incomes. The housing market in the UK continues to be dramatically supported by that of historically low interest rates, low rates of house building, steady income growth, and of course, positive demographics; as well, "In our modeling, even very large (by recent standards) macroeconomic shocks fail to create a significant downturn in the market." (Cameron et al, 2006). There are many issues in regards to the UK housing market that must be taken seriously into consideration when trying to understand the matter as a whole, and so in this paper we will be discussing all of these, as well as any and all other matters that are in relation to this and that prove as being some form of important substance in regards to this issue in general. There are certain issues in particular for example, such as the causes of the housing demand, and the current government's proposals in regards to solving the problem of housing demand, for instance; these are two incredibly critical matters that tie closely in relation to the issue of the housing market in the UK, which is why they will be thoroughly explained and discussed here. In order to truly be able to understand and acknowledge a matter such as this, there is an incredible need for all parts in relation to it in general to be taken just as seriously into consideration as the actual subject itself. This is what will be dissertated in the following. There are truly so many different issues that must be taken into consideration in regards to the UK housing market however one of the most important and thus one which should indefinitely come first is that of the matter of the shortfall of the housing supply in the UK, and one of the main explanations for this has to deal with the matter of the high immigration rates into the UK; in more basic terms, there are constantly new and more people that are moving to the UK, and the supply is falling short of the demand, which thus overall is causing quite a catastrophe of sorts. In fact, in order to be more specific, "The recently revealed inflexibility of housing supply and a major increase in the immigration projection point to even greater pressures on the housing market, especially for first time buyers who will still face higher prices." (Housing Report, 2006). In order to clear things up even further, it should be known that various different independent reports have been published, for example there was one by H M Treasury, which examined the reasons for the incredible under supply of housing in the UK, and as well, it even suggested that in regards to this issue there needs to be a building of approximately or at least 39,000 houses per year in order to make up for this, and this is "even without allowing for the replacement of the existing housing stock. It found that there was a weak response of housing supply to changes in demand. It continued 'higher demand therefore tends to be translated into higher house prices rather than increased output of houses." (Housing Report, 2006). The Centre for Housing Policy at the University of York (CHP) was established in 1990 with the support of the Joseph Rowntree Foundation. The Centre was designed to become a leader in policy relevant research and has since established itself as one of the leading centres of housing and social policy research in the UK. CHP policy research is supported through competitive tender, including work for the national governments of the UK, local government, Registered Social Landlords and a wide range of voluntary sector and charitable organisations. CHP also undertakes in-depth policy related academic research, supported by staff making unsolicited applications to research funding organisations such as the Economic and Social Research Council. The matter of affordability is a great one in regards to the issue of why there is such a dramatically increasing demand for housing; in fact, recent housing policy debates in the UK have shifted away from that of the actual discussion of housing in general to that of more market-oriented analyses of affordability. Furthermore, it is the actual principles that lie behind the concepts of such things as need and affordability which must be properly defined and understood, and as well, the different ways in which policy is specified in different tenures must be seriously taken into consideration, and basically, up to the present time, the shift in emphasis is really more one of rather rhetoric than one of reality, and thus, speaking in more fundamental terms, the forms in which the current policies are implemented are then considered to basically bear very little relationship in regards to those that are and have been suggested by an analysis of more basic principles overall. The matter of a significantly increased change in households is also considered as being a major contributing factor in regards to the reasoning behind why there is such a serious housing demand in the UK at the present time; this is not only in reference to the differences of the persons in the actual household, but also and perhaps more so in regards to how much is being used in the household itself. For instance, the amounts of water and heat that are being used in the average household in the UK have increased incredibly, especially over the last few years in particular. This creates a problem because there is then more money needing to be spent, as well as more power and matters of the like being used, and therefore this creates a downfall economically; this is a matter which also relates to another of the more contributing factors to this issue, which is that of population growth. The population has increased consistently and steadily in the UK over the past decade in fact or more, and this has thus obviously greatly increased the demand for housing; in fact, in mid-2005 in the UK, there was an estimated 60.2 million people residing in the area, but the UK has an incredibly steady growing population, and in fact it grew by roughly 400,000 people in the year to mid-2005 alone. (National Statistics, 2006). Furthermore, the UK population has increased by 7.7% since the year 1971, from 55.9 million, and growth has been even faster than that in more recent years. As well, there is the important fact that in the UK there have been more births than deaths every year, and the population has thus also grown due to natural change; however there is also a significantly increased number of immigrants that are moving to reside in the UK, which only even further adds to the population and thus simply increases the need for housing. The population of the UK actually reached an estimated 60.5 million in mid-2006, and is growing by more than 320,000 a year at this point; "Our numbers have increased sixfold since 1800 and a fifth by 1050, and the environmental impacts of this growth are already clear in the relentless development pressures on our finite supply of land and natural resources. Officially projected to rise by about 0.4% a year to reach 71 million by 2074 - an increase of more than 10 million, population growth in the UK has reached near-record levels, yet no political party has a policy aimed at stabilizing and reducing today's unsustainable numbers." (National Statistics, 2006). In fact, to make it even clearer, it should be known that the UK is in fact more populated and dense than even China, and is actually the third most densely populated country in all of Europe. "OPT researchers have concluded that a population of 30 million may be the largest that the UK can sustain in the 22nd century if it is to be largely self-sufficient in clean energy, if continuing damage to local and global environments is to stop, and if citizens are to enjoy an acceptable quality of life. This research is in part based on the techniques of ecological footprinting, but the key factors determining the need for population reduction in the UK and worldwide are climate change and energy requirements." (National Statistics, 2006). Overall it is quite easy to see what the reasons are behind the significant standard of demand for housing in the UK overall, and it is understandable now to recognize that there is more than one factor that is responsible for this. Therefore, in response to that, there is then numerous different things that need to be done in order to attempt at resolving this problem altogether. As well, if the current government's proposals go through, then there should be a raise of housing availabilities and thus a dramatic decrease in the demand. Some of the proposals include that of: an increase in housing supply in England to 20,000 net additions per year; a good and appropriate balance of housing types and tenures; shared ownership in order to increase shared equity; work with housing associations, local authorities, and the FBI; and the putting of empty properties back on the market - just to name a few. If these such proposals are properly and hopefully promptly carried out, then there will be a significant increase in supply, and a lessened demand overall, thus resolving the problem once and for all. References Barker, K. (2003). Review of housing supply. Retrieved November 27, 2006, from http://society.guardian.co.uk/housingdemand/page/0,,1458623,00.html BBC. (2006). Ethnic birth rate climbs. Retrieved November 27, 2006, from http://news.bbc.co.uk/1/hi/uk/1556901.stm Cameron, G., Muellbauer, J., & Murphy, A. (2006). UK market outlook. Retrieved November 27, 2006, from http://www.housingoutlook.co.uk/Pages/uk.html Housing. (2006). Housing in the UK. Retrieved November 27, 2006, from http://www.housingnet.co.uk/ Housing Report. (2006). The impact of immigration on housing in the UK. Retrieved November 27, 2006, from http://www.migrationwatchuk.org/archive/housing/briefing_paper_z.asp National Statistics. (2006). Population Estimates. Retrieved November 27, 2006, from http://www.statistics.gov.uk/CCI/nugget.aspID=6 Optimum Population. (2006). The UK's population problem. Retrieved November 27, 2006, from http://www.optimumpopulation.org/opt.toomany.uk.html Population Growth. (2006). Human population growth and migration. Retrieved November 27, 2006, from http://www.population-growth-migration.info/ UK Housing Review. (2006). Housing Review. Retrieved November 27, 2006, from http://www.ukhousingreview.org.uk/ Whitehead, CME. (1991). From need to affordability: An analysis of UK housing. 28(87): 1-887. Read More