Critically Analyze the Factors that determine the UK Housing Market (GC01505)
Acknowledgment
First of all, I would like to thank to the almighty God for giving me knowledge and wisdom to complete this research work. Then, I would appreciate my parents who have contributed a lot in the way of my study completion and career development with their finances, guidance’s and ever-ending loves. Next, wish to say many thanks to every participant who took part in the research work and survey. Following this, I would appreciate my supervisor who supported me a lot with effective feedback, notes, guidance and suggestions. Finally, I will appreciate to my lovely wife who helped me with her company and taking care of in the way of my project completion.
Abstract
The aim of this research is to investigate determinants that affect the performance of UK housing markets. The objectives of this study are a) to investigate the determinants which affect the performance of the UK housing market; b) to analyze the factors that influence the property businesses in the UK; c) to explore the factors that may affect the performance of property businesses and UK housing market in future; d) to provide recommendations for property businesses and UK housing market so that they can meet the challenges and perform better. Several mythologies have been applied in this study. Combine of interpretivism and positivism philosophy has been used in this study. A deductive approach has been applied in this study. Thus, combining qualitative and quantitative data collection methods has been used. The researcher used both primary and secondary data sources.
As an instrument, the survey technique has been used using a questionnaire. As sampling technique, this study used non-probability techniques focusing on 100 of target population in the UK housing industry. The participants were grouped into five age group that are 25-34, 45-44, 45-54, 55+. The participants were randomly selected from both male and female and different places in London. In this study, both quantitative and qualitative data analysis techniques were used. As the qualitative data analysis techniques, the content and thematic analysis tools were used. As the quantitative data analysis tools, SPSS, MS Excel Sheet were used.
The finding of this study has identified a number of determinants that affect the UK housing market performance. The key determinants are fluctuation in house prices and interest rates, populations, the income of households, social trends, interest rate, availability of credit, UK supply of loans for home, fashion, price of substitutes, buy-to-let demand, expectations of consumers, and changes in demand, debt, equity and property prices, availability of factors, costs, government legislations, subsidies, technologies and shift in supply, interest rates debt, equity, populations, the income of households, social trends, availability of credit, UK supply of loans for home, fashion, price of substitutes, buy-to-let demand, expectations of consumers, and changes in demand Brexit issue, government legislations, stamp duties, and technologies.
A number of factors may affect the business of the UK housing market in the future. These are Brexit and EU referendum, collapse of British pounds, economic volatility, government legislations, social and demographic factors, and tax imposed by the government. Therefore, the study suggests the UK housing market leaders to take effective initiatives to deal with these determinants to gain long-time success.
Chapter 1: Introduction
1.1 Introduction
The global economy is still now recovering from the global recession and financial crisis created in 2008/2009. By this time the UK economy is facing great challenges nowadays because of the Brexit/EU referendum. On the other hand, the national election of the US and the victory of Donald Tramp have created the global economy volatile. In this circumstance, the UK housing industry and property businesses have been facing severe challenges. According to Financial Times (2016), the aftermath of vote to leave the EU shocked to the UK economy affecting the housing market dramatically. Although the crash may be avoided in near future, serious structural problems will remain for long time.
A report conducted by ONS (2016) disclosed that the UK housing market has been facing challenges for the last two decades because of increasing trends in house price inflation, decreased trend in house price earning, social and demographic changes, and economic volatility. Hilber and Vermeulen (2016) said the high interest rate and the increased price of houses in the UK have created an affordability crisis and price volatility in the housing market. Therefore, it has been challenging issues for the UK housing market and the property businesses to understand the determinants and challenges that affect the performance of the housing market and property businesses. This chapter provides a brief explanation of the UK housing market in the first section. Then, several problems faced by the UK housing market are defined in the second section.
In the following section, the rationale of this research is discussed in section. Following this, the aims and objectives of this research are listed with the research questions. Finally, this chapter provides research scopes, and research significances, and research structure.
1.2 Research Background
Study shows that several researches have been conducted and scholarly articles have been published on how the UK housing marketing is performing and how it can improve to ensure adequate affordable houses. The researches and scholarly articles have focused on several issues related to the UK housing market. These include government policies such as tax issues and stamp duty, social housing, right to buy, mortgage and loan issues. According to CWC (2016), the decisions taken by the UK people (through Brexit/EU referendum) to leave EU has shaken the UK housing market and property businesses. The declared house price was 3% in 2016, which is now predicting 1% in 2017. Although there are uncertainties and risks in projections of UK housing market, Kuenzel and Bjornbak (2017) predicts that the price growth in UK housing market would be 4% and 6% in 2018 and 2019 respectively.
It is also predicted by CWC (2016) that the average growth in UK housing market would 5%-6% from 2020 to 2025 and the house prices would increase unexpectedly because of supply shortages. Schindler (2016) said the impact of the Brexit/EU referendum will vary by region, while London would face severe problems. It is estimated that average house prices in London will be £60,000 lower than the previous years. This means the house prices will still be higher in future in compare to the previous years despite the effect of EU referendum and Brexit.
A study by ONS (2016) on housing affordability shows that households need to save for at least 19 years to buy a new home, which was possible in 2000 only by six years, and in 1990 by two years. The analysis by Countrywide (2016) on affordability also shows that huge disparity has been shown between renters and the people aged 20-39 who have ability to gain housing ladder. A good news may come from the Brexit that it may support the people to hold the housing latter sooner because slow face in housing price growth. However, this effective will be small because if the renters start to save in 2016 will be able to buy the house in 2035, rather than in 2037 if there were not Brexit issue raised (CWC, 2016).
1.3 Research Problems
The study disclosed that the UK housing market is now facing a number of challenges. A study conducted by City AM (2016) revealed that the great uncertainty is coming from post-Brexit dilemma, fiscal austerity, and financial uncertainty. The other study conducted by Mccarthy (2016) defined three key challenges that are facing by UK property buyers. First, the Brexit and EU referendum has brought great uncertainty for UK property buyers. Second, China’s Slumping Market is de-motivating the Chinese investors who want to buy houses in UK as their foreign haven.
Third, London’s stagnation including the increased of home prices, higher property taxes, and stamp duty levies are significantly affecting the performance of UK housing market in current days. Crendon Insurance Brokers (2016) stated that the key challenges faced by the UK housing market are EU referendum (that is mainly affecting the foreign investment), China’s slumping market, smaller market growth, London stagnation, lack of confidence of purchase and investment among the buyers. Incom (2016) defined four key problems for the UK housing market that are housing supply, technology infrastructure, changing working practice and mobility, and digital inclusion. Jonas (2016) identified a number of issues for UK property businesses. These are housing shortage, Brexit, increasing construction costs, higher interest rates, skills shortage, reform in UK planning system and rating system, higher wages costs. However, many of the housing marketers and property businesses are still now in dilemma to define the determinants that affect the performance of their business and UK housing market.
1.4 Research Rational
The study discloses that several factors and determinants affect the performance of the UK housing market and property businesses. The determinants are credit and disposable income, interest rate. According to Brooks and Tsolacos (2016), the interest rate is considered as the macroeconomic indicator. This is because it includes information about economic situations and promotes investment opportunities. Goodhart and Hofmann (2015) said money supply and credit include multidirectional links in the housing market. In fact, house prices and buying affect the disposable income of general people and impact the confidence of house buyers. Adam and Ronald (2016) argued that GDP affects the economic activities significantly and house prices are closed related to employment, real industrial productions, and real consumptions. Increased trend of migrants is also a cause of boosting housing prices in the UK. Thus, it is important to identify the determinants that affect the performance of the UK housing market.
The researches on the determinants that affect the UK housing market are essentials for several reasons. Firstly, the housing market contributes a lot to the whole economy of the UK. In the UK, the owner-occupation rate is higher than in European countries. For example, in 2016 the owner-occupation rate in UK was 65%, where it was 55% in France and 45% in Germany (Halifax, 2016). Secondly, the UK government motivates individual people to buy homes. The government also promotes financial institutions to create favorable economic situations. For example, Nationwide which is the biggest building society in the UK motivates the willingness of people to buy homes directly. In addition, it has also indirect affect on the economic growth, people buying power, interest rate, and unemployment rate (Halifax, 2016).
Thirdly, the UK housing market is facing challenges because of economic policies and Brexit/EU referendum issue (Cable, 2016). For example, the vote in favour of leaving the UK from EU has affected the UK economy negatively; ultimately that has affected the UK housing market. Therefore, conducting research on the UK housing market and the determinants that affect the UK housing market are practically and theoretically important nowadays. As a result, the purpose of this research is to investigate and analyze the factors and determinants that affect the performance of UK property businesses and housing markets. In other words, what determinants and factors do affect the performance of UK property businesses and the housing market? The study in this research will explore the evidence of this question………….
Full Documents Click Download Button
