What are the current conditions of the UK housing market?
First, this essay will explore the current changes that have taken place in the UK house prices and why. Secondly, it will illustrate the changes in the house prices and analyse the factors that have affected the housing market. Then, this essay will examine the recent past and what will happen in the near future in terms of demand and supply factors that are currently at work in the market. The essay will also demonstrate the demand and supply diagram and the connection between demand or supply curves & the impact these will have on price & quantity. Finally, the relationship between the factors that have affected the housing market, the problems it has overcome and will be facing and the short term factors will be evaluated.
Currently, the UK house prices have deflated because the banks have been hit by credit crunch, they can no longer afford to lend out money and this has caused the houses prices to drop. Times online stated that “British house prices fell by a record 15 per cent in the year to October as the country's deteriorating economy wiped £30,000 off the value of an average UK home.” Therefore, the banks have become very choosy as to whom they lend a mortgage as their loan are no longer protected by the increasing house prices. The house prices started to go down as fewer people where able to get mortgages. Banks now insist on larger deposits as house prices decline. Now not that many people have deposits on hand to pay, therefore hardly fewer people have approved mortgages. This will make demand decrease that will force prices low. With all this happening due to credit crunch in the housing market, property sellers have decided not to sell their properties till prices go up at a later stage.
Recently, house prices have dropped, the banks are no longer so eager to lend money because they have lost confidence in the market. This will cause the rent prices...