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Business Economics - Uk Housing Market

Essay by   •  January 9, 2012  •  Case Study  •  1,169 Words (5 Pages)  •  1,821 Views

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Business Economics

The Uk housing market


The aim of this assignment is to analyse the factors that determine the prices in the UK housing market. The assignment will analyse related links that may have an effect on this such as rising unemployment, high interest rates, location costs, and future predictions for the UK housing Markets.

Supply and Demand


In a market the demand for goods and services may come from business or households. Some businesses may demand raw materials to manufacture goods and services from certain businesses.

( Business Economics Neil Harris)


Businesses supply goods and services which consumers demand. Business economics theory distinguishes between supply in the short term, when only certain factors of production such as labour and raw materials may be varied in quantity, and in the long term when all inputs can be changed.

( Business Economics Neil Harris)


Inflation may be defined as a sustained rise in the average prices over time. Usually, it is taken to be rising prices of consumer goods and services in the shops, although changes in the costs of Mortgages may or may not be included, depending on the measure of inflation used. Other measures of inflation, also called indices, may relate to the prices of raw materials or producer goods, so are particularly relevant to businesses.

( Business Economics Neil Harris)

There are many factors that determine house prices in the UK; they could be the location in which someone may be situated for example in London it would cost considerably more to live then in Preston. The location costs of London is very high, London is certainly one of the most expensive cities in the world to live in, the main reasons London has such a high living cost is because it is a very attractive city to live in with a high demand rate for living. With a high demand rate tends to come higher costs.

The points that I have listed below can determined the main factors that have a great influence on the housing market.

* Economic recession and rising unemployment.

* Lack of people wanting to buy when house prices are falling.

* Low affordability, the rise in high prices against people's income. ( Inflation)

* Low Interest rates

* Location costs

* Economic recession and rising unemployment- The number of unemployed people in the UK has been dangerously rising over the last few years, it has hit a peak of over two million people unemployed. This is the highest number it has reached since 1997. " Gordon Brown recently expressed his concerns by stating " it was a matter of personal regret" for him that jobs were been lost and he also then he said " that is why we will do everything we can to help people get back to work" 1)

There are many Economists that believe within the next year there could be up to three million people unemployed, which is most certainly a very alarming figure to be looking at. Jobs are been lost in the service sector at a growing rate as this recession falls into a darker whole. The hardest struck sectors are construction,



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