HOUSING ECONOMICS

Housing Economics

Housing Economics

Introduction

The Housing market is referred to as the market for the purchase and sale of properties are being done, directly or indirectly through brokers. According to the experts, the international buyers have activated the property market of London; the outlook of the market is strong enough. From 2000 to 2010, the activities of the UK real estate has been grown at the average growth rate 6%. This increasing trend is because of the increasing demand of the real estate services and housing. In 2010, this market has been reached 199 billion and this market is expanded by 76% during the period 2000-2010. The major buyer in this market is mainly households; the households have the dominant market share of around 70% during the past years. The household spending has risen by 6% annually; this figure is an average of the preceding years. This rising trend of household is because of the higher lending rate and the rapid increasing the real estate property value.

In London, the local real estate service providers' turnover has been increased since 200 by 85%. The UK sector of letting own property remains to be the primary source of income for the industry, containing 68% of the local earnings in 2010, and having grown by 65% since the beginning of the period. The fees obtain by the real estate services adds value in the local revenue of UK.

Apart from the economic slowdown, London is facing the booming trend in its property market and this also affects its stakeholders. According to the expert's prognostication, London will continue to benefit from its predominance of higher value business activity and its focus for international investment, in spite of the economic slowdown. On an annualized basis it is expected that the residential value of UK is going to be raised by 3.3% per annum over the next five years.

Demand Side and Supply Side Subsidies

The power of sellers is generally high in situations where, demand for properties in the market is high, but the market has shortage of quality properties (scarcity of supply). In such situations, the power in the market shifts towards the seller. It happens because demand exceeds supply in the market for quality houses. Sellers get the opportunity to either wait for offers which equal the value of their property, or exceed their minimum demanded price. On the contrary, at times when demand is weak, irrespective of quality or older properties, and there is excess supply of properties in the market, then power shifts from sellers to potential buyers. The buyers get the opportunity to choose among the abundant supply of housing properties, at a negotiable price which is well below the published price.

As demand for houses in specific regions or areas rises (such as in situations when there is an influx of population, or increase in incomes subsequent to drop in unemployment), it causes an upward trend in the real estate prices. Most of the times, the supply of available ...