What Does The Uk Macroeconomic Environment Affect The Regional House Prices?

With the consistent increase of property prices and more personal debt than ever before, we assume that there’s a housing bubble in Australia. The statistics show that from 2008 till now, property prices have been going up as a result of increased mortgage debt. When it slows down, that could cause a property crash. We are sure that there’s a housing bubble, but we cannot confirm when it will finally burst although a few area in Australia has already met a decrease of house prices. There are 3 indicators of the housing bubble in Australia.

Macroeconomics is an excellent tool for the analysis of the housing industry as something like a capital good, as a home is considered to be, cannot easily be studied in a short-term platform. Real estate is a good that costs several times more than an average persons annual income, in the United States that number is typically 7 times as much, and in the United Kingdom that number is 14 times as much. Several factors of both supply and demand directly impact the housing market on a macroeconomic scale. (Business Economics, 1)

It seems hard to believe that over ten years have elapsed since the peak of the US housing market in the previous economic expansion. Residential construction as a percentage of real GDP reached a zenith of 6.2% in 2005 Q3. The ensuing contraction saw this share decline -60% to trough at 2.5% of GDP in 2010 Q3. The current economic expansion began in 2009 Q3, but the sheer magnitude of the collapse made it virtually impossible for any subsequent housing recovery to impart the same outsized contributions to headline GDP growth compared to the previous cycle. This has consequently played a significant role in restricting the ability of the economy to shift into a higher gear of growth during the current

- London is one of the famous and expensive cities in the world which offers a lot of opportunities to people to elaborate on it. However, most of the people cannot afford its properties price and cost of living there. This report reviews/ discuss how house prices had been changed in the last six to ten years. A brief overview on average selling properties, number of properties sold in London, comparison between house prices in London and other cities in UK and how the percentage change, how BREXIT influence house prices and what these prices leads too. All in all, the solutions that the government made to solve these issues and some recommendation to the government to assist them more.

According to Loungani, (2010) “Robert Shiller is well known for predicting the U.S. stock market crash of 2000–01. In 2003, he warned that U.S. house prices too contained a “bubble”; that is, they had risen far beyond what was warranted by fundamental driving forces such as income growth, interest rates, demographic change, and building costs.” (pg. 16) This is a clear example of how macroeconomic volatility affects the housing industry as well as other industries that feed off of the housing industry such as construction.

The low interest rate in Australia effects the housing market. Low interest rates allow property prices to push higher creating an unbalanced ratio between prices of property and income of owners of property and those who don’t. A housing bubble in the capital cities of Australia has potential to create significant danger to the Australia housing market and economy if interest rates are cut any

Prior to the crisis, investments in the residential space saw a significant shift around 2002. Prior to that, residential investments over almost a 30-year period was estimated between 4 and 5 percent of the nominal gross domestic product. In only a short period of time from 2002 to 2005, housing prices exploded, housing prices skyrocketed, with the peak prices showing an increase of over 12% per year. (Dokko et al. , 2009)

For several years, interest has grown in the understanding of apparent determinants of housing price. Studies have shed light on this issue by identifying many factors where housing prices historically exhibit a high degree of statistical association. Economists Daniel Rubinfeld and David Harrison developed a dataset by means of matching data on nitrogen dioxide pollution in the Boston, MA, metropolitan area from the U.S. Department of Transportation with 1970 tract-level data on median house prices. This report hopes to examine whether or not there are supplementary explanatory variables for the median value of houses in Boston.

The Housing Industry Association of Australia (HIA) (Housing Industry Association, 2003, p. 14) estimates that, in the case of new housing, “the total indirect tax take is over $124,000 in Sydney and $88,000 in Melbourne”. In order to reduce the rate of house price inflation, the government was requested to reduce the current levels of charges. Owing to a number of interacting forces determining housing prices are unlikely to have the desired impact. What is more, the rising population in Australia results in the growth in the number of households, the main unit of demand in housing markets. Due to Immigration of other countries, this has been a fundamental factor of housing developments and price inflation in some areas over the long term. With the growth of economy and improvement of living standards, Australians are able to afford the house, leading to the price rise. It is likely that house price inflation can occur on some areas where the average incomes of individuals increased. In almost all societies, housing in behalf of the main family fortunes. When the value of existing house rise, the house owners and real estate companies would be confident to sell house with raising the housing

“The regulator has imposed higher mortgage capital risk rates, leading to out of cycle rate hikes [from the banks].” This has made it more expensive for property investors to find a mortgage, which has contributed to the cooling in the market.

in regard of the timing of the Housing Boom the authors by providing figures and chart explain: ” according to the evidences residential investment moved above its average share (for the 1974–2001 period) in 2002 and rose substantially through the end of 2005, reaching 6¼ percent of GDP late that year—the highest share in a half-century.” (Dokko, Doyle, Kiley, Kim, Sherlund, Sim, & Heuvel, 2009).

Volatility in the stock prices can impact on the cost of home ownership because of its relationship to mortgage interest rates. Although it isn’t the only factor that affects mortgage rates, other economic such as unemployment rate, inflation and the effect of demand and supply are still tied to the stock market in one way or the other. The reason for this is that stock prices are quite sensitive to economic uncertainties and subsequently sends a ripple effect of changes on other sectors including housing.

This research topic is significant to the current property market in Singapore and its sudden increased demand for houses despite the economic downturn, exploring deeper as to whether the government policies were the real influential causes to this boom in property demand. It has relevance to the economic concepts of demand and supply, elasticity, inflation and monopolistic competition. This topic is worthy of investigation because it is a hot media topic in Singapore, and is widely debated in the country because it’s the most expensive household asset.[2]

The overall health of the economy has a significant impact on the real estate industry. The economy is measured using indicators such as the GDP, employment percentages, manufacturing activity, and price of goods. When these indicators identify a sluggish economy it translate directly to declining real estate sales. RE/MAX and the customer alike are directly affected by the economy. A slow economy consists of decreased homes sales while a flourishing economy affords the customer the opportunity to buy, which relates to an increase in home sales for the realtor. (Amadeo, 2016)

A difficult characteristic to understand about the housing market is how a price is given for a particular house. That price will be designated to that particular house alone. All houses have various pricing, so I can’t always assume that one will cost more or less than any other. The pricing for houses vary based on their characteristics. Each characteristic must be analyzed to determine its contribution or detraction toward the price. I have taken some of these characteristics and modeled the relationship between them and the price of real estate for a specific area.