Factors Affecting UK Housing Market

3223 Words Oct 17th, 2013 13 Pages

Factors Affecting UK Housing Market
Intake August, 2012

Written by: Milad Pir Mohammad
October 2012

Table of Contents
Titles Page
Executive Summary
Introduction 3
Factors affecting Demand of a House in the Market 4
1.1 Price of the House 4
1.2 Rent of House 5
1.3 Population 6
1.4 Household Income 8
1.5 Future Price Expectation 8

2.0 Supply of House in the UK and London 10 2.1 Price of the House 10 2.1 Availability and Price of land 11 2.1 Future Price Expectation 12 3.0 Government Policies affecting Housing Market 14 3.1
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As per above diagram, per month rent of average houses in the UK has raised sharply over the period. In Northern Ireland, Rent price hasn’t changed significantly and it remained one of the cheapest area in UK with an average per month rent of almost 600 GBP in 20 12. However, London has indicated a huge growth. The price of rent has gone up from 1300 in 2006 to almost 2700 in 2012. This upward trend of rent in London influences the demand for house market to shift right –ward. As an illustration, if the price of rent goes up, it gives people a judgment to invest in house market and save the rent amount indirectly in property by giving monthly installments. In addition, renting house is considered to be a substitute to purchasing of it. So, if the price of a substitute product goes up (which is the case in London), the demand for product increases. As a result, by keeping all other factors constant, the demand of house in London has to increase if the price of renting house has increased.

1.3 Population:
UK is heavily populated comparing to most other regions. Also, population density is recorded very high in Britain. Inside the UK, the population is distributed unequally. England constitutes almost 84% of overall UK population. Wales, Scotland and Northern Ireland constitute very minor percentages.

Source: Office For National Statistics
The above chart clearly shows that population of UK
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