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Transcript of Property Valuation
Identify What influences the UK property market
Discuss the various influences on the UK property market and their impact
Evaluate the impact that the various influences have on the UK property market
Influences on the Property Market
There are many influences on the UK property market, from growth of the UK economy, to employment security, to the time of the year - no one is interested buying a house just after paying for Christmas! First time buyers are now finding it extremely hard to get on that first rung of the property ladder and may have to save several more years for the initial deposit
A number of factors influence the shape, size,strength and buoyancy of the property market.
Can you name them?
The UK property market has been in a desperate state for the last 6 years due to the recession: when wages are low and supply exceeds demand. This has led to people selling properties having to wait longer and lower their original asking price. However, the government have recently stated that the recession is now over and are predicting a housing boom from 2014 which means property value will increase.
"Everyone should have the opportunity to rent or buy a decent home at a price they can afford, in a place where they want to live and work." (www.communities.gov.uk/housing/about/)
The government are developing plans to build over three million new homes by 2020, which will include more affordable housing and rentable properties.
The development of properties enables an individual or company asset to be formed. Form this asset, the individual or company can raise finance to develop more properties in the UK economy, creating a continuing flow of development. This process can be a business which is very lucrative: there are now several property millionaires in the the UK.
The impact of this sort of development on the economy does not stop once the houses are built. Each of these houses requires servicing and maintaining which generates further income to the economy. A strong property market enables enables the UK economy to grow.
The cost of loans - cheaper loans mean people can afford to buy
Fashion - for example, renting is seen as "dead money" as you do not add value to the property as you do not own it
UK and global economies - for example, when people from the London counties invest in the North, house prices there increase substantially
The amount of housing being built - if supply is limited, prices are high; if supply is plentiful, prices fall
Population growth - as more people need housing, demand grows, inflating property prices
Demographics - for example if ther are more old people, there will be a greater need for single-story homes, so builders will want to build bungalows
The government has many policies that can affect the the property market one of these is the HIP. This is the Home Information Pack, which is part of a procedure that the government brought in to try to make selling and buying property easier. The Energy Performance Certificate, part of the HIP survey, gives in effect and energy rating to the property for sale such that a potential buyer is aware of where it lies on scale. The HIP rating for the property can be displayed on the "for sale" sign - it is rather like buying a washing machine which can be a grade A to F.
The second intervention is in the base rate of lending. This is the amount of interest that the Bank of England charges the lenders to borrow money. This is then passed down to buyers who take out a mortgage on a property. The lower the rate the better the economy is.