Unit 2 Macro: The UK Housing Market in 2011
Recommend on Google+
This blog provides a chart-based overview of developments in the UK housing market in 2011. The housing industry has a big effect on macroeconomic variables such as output, employment and investment. Has there been a marked recovery in property prices, new housing starts and mortgage lending?
* 2011 has seen the UK residential housing market remaining subdued outside of London.
* Average prices have fallen by around 1% during the year although with CPI inflation well above target throughout the year, there has been another sizeable decline in real property prices in most regions of the UK. The average house cost 165,798 pounds in November, according to mortgage lender Nationwide.
* In some regions average prices have fallen in nominal terms by more than 5%, the biggest fall has been in the North East with a 7% drop
* In many areas house prices remain well below their January 2008 peak
* However in London where demand nearly always outstrips supply, house prices have recovered strongly
* It remains tough to get a mortgage. New mortgage lending remains at low levels even though the cost of servicing a mortgage loan has dropped because of continued low interest rates. Credit continues to be constrained or impaired in the housing loan market and this has inevitably weighed down on the confidence of businesses linked to the housing market. New mortgage approvals are regarded as a useful lead indicator of future movements in the housing industry
* The number of new housing starts remains at very low levels and certainly well under the minimum number of new homes required to meet the demands of a growing population
* Low mortgage availability has driven more buyers into the rental market, pushing rents higher and making the task of finding suitable and affordable rented property even tougher as we go into 2012
* 2012 may be another difficult year for the UK housing market. A Reuters poll of 23 economists showed house prices slipping by a median 1.7 percent next year. The biggest risks are a fresh credit crunch linked to the financial crisis in the Euro Zone and a fall in demand because of another surge in unemployment if the UK suffers a double dip recession
* Low interest rates seem to have done little to kick-start the property market. Existing home-owners continue to deleverage by repaying some of their existing debts (mortgage equity withdrawal remains negative)
* The British government announced a £400 million programme to kickstart a stagnant first-time buyers’ market through the use of taxpayer-backed 95-percent mortgages - it remains to be seen whether this will have much traction in such a weak market
blog comments powered by Disqus
Investment in Energy Infrastructure [23 May 2012]
Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: Evaluation on Supply-Side Policies [21 May 2012]
Unit 3 Micro: Game Theory and Business Economics [21 May 2012]
Unit 2 Macro: The Current Account of the Balance of Payments [20 May 2012]
Unit 2 Macro: Migration and the UK Economy [20 May 2012]
Unit 2 Macro: Positive and Negative Multiplier Effects [20 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Measuring Unemployment in the UK [20 May 2012]
Unit 2 Macro: Measuring Inflation in the UK [20 May 2012]
Unit 2 Macro: Real Interest Rates [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Unit 2 Macro: The Output Gap [20 May 2012]
Revision notes on unemployment [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [16 May 2012]
Unit 1 Micro: Revision Presentation on Elasticity of Supply [16 May 2012]
Unit 1 Micro: Revision Presentation on the Price Mechanism [16 May 2012]
Grexit - Andrew Balls on Greece and the Euro [16 May 2012]
Unit 1 Micro: Revision on Rice Prices [13 May 2012]
Unit 1 Micro: Price Elasticity of Supply [13 May 2012]
Unit 1 Micro: Economics of Cocoa Prices [12 May 2012]
Unit 1 Micro: Economics of a Minimum Wage [12 May 2012]
Unit 1 Micro: Poverty and Inequality and Market Failure [12 May 2012]
Unit 1 Micro: Asymmetric Information [12 May 2012]
Unit 1 Micro: De-Merit Goods [12 May 2012]
Unit 1 Micro: Differences between Merit and Public Goods [12 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 1 Micro: Revision Blogs on Markets and Intervention [10 May 2012]
Unit 1 Micro: Revision Quiz and Game on Market Prices [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Unit 2 Macro: Growth and Development Glossary [5 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Unit 2 Macro: Unemployment Glossary [5 May 2012]
Unit 2 Macro: Fiscal Policy Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Robert Schiller - Finance and the Good Society [1 May 2012]
Unit 1 Micro: Climate Change Policies - Finding the Right Mix [30 Apr 2012]
Unit 1 Micro: Using the Cost-Benefit Principle [30 Apr 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 4 Macro: Spanish unemployed head to Argentina [29 Apr 2012]
Unit 2 Macro: Britain back in Recession [29 Apr 2012]
Tullow Oil and African Development [25 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Unit 2 Macro: Heathow’s Capacity and Connectivity Crunch [22 Apr 2012]
Unit 1 Micro: Adecco and Monopsony Power [22 Apr 2012]
Unit 2 Macro: Better news on jobs in the UK? [19 Apr 2012]
Ukraine Hotel ‘Bandits’? [12 Apr 2012]
Unit 2 Macro: Skills Shortages Hold Back Recovery [12 Apr 2012]
Superb article on unemployment [8 Apr 2012]
Unit 3 Micro: Revision on Contestable Markets [8 Apr 2012]
Unit 3 Micro: Revision on Monopoly Price and Output [6 Apr 2012]
Unit 2 Macro: How the Economic Cycle affects Businesses [6 Apr 2012]
Unit 3 Micro: Revision on Scale Economies and MES [5 Apr 2012]
Unit 1 Micro: Revision on Price Elasticity of Supply [5 Apr 2012]
Unit 1 Micro: Revision on Producer Surplus [4 Apr 2012]
Unit 1 Micro: Revision on Elasticity of Demand (for Rice) [3 Apr 2012]
Unit 2 Macro: Revision on Interest Rates and the Exchange Rate [3 Apr 2012]
Unit 4 Macro: Productivity Improvements in China [3 Apr 2012]
Unit 1 Micro: The Collapsing Price of Carbon [3 Apr 2012]
Unit 1 Micro: Revision on Producer Subsidies [2 Apr 2012]
Unit 4 Macro: Floating and Managed Floating Exchange Rates [2 Apr 2012]
Unit 2 Macro: Revision on Real Economic Data [2 Apr 2012]
Unit 4 Macro: Unemployment Scarring Effects [2 Apr 2012]
Unit 2 Macro: Revision on Real Disposable Income [2 Apr 2012]
Unit 3 Micro: Revision on Scale Economies, Technology and Prices [1 Apr 2012]
Unit 4 Macro: Pain in Spain as Fiscal Austerity Bites [1 Apr 2012]
Unit 1 Micro: Revision on Maximum Rents in Housing [1 Apr 2012]
Unit 1 Micro: Revision on Producer Cartels [31 Mar 2012]
Unit 3 Micro: Revision on Fixed and Variable Costs [31 Mar 2012]
Unit 2 Macro: Revision on Index Numbers [31 Mar 2012]
Unit 2 Macro: Revision on Capital Investment [30 Mar 2012]
Unit 1 Micro: Brazilian coffee buffer stock hit by falling prices [29 Mar 2012]
Intergenerational Equity - Fairness and the Slump [28 Mar 2012]
Blanchflower calls for more action to address youth jobless crisis [28 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
George Buckley at the Millfield Economics Society [28 Mar 2012]
Beyond the Bike - Monetary Policy in Africa [28 Mar 2012]
Unit 4 Macro: Evaluating 3 Years of Quantitative Easing [27 Mar 2012]
Unit 1 Micro: The Tax on Beer [16 Mar 2012]
Unit 1 Micro: Inequality - The Rise of Fuel Poverty [15 Mar 2012]
Unit 2 Macro: Seasonal and Structural Unemployment [15 Mar 2012]
Unit 1 Micro: Government launches New Buy Loan Guarantee Scheme [12 Mar 2012]
Unit 4 Macro: Video Resources on the Euro Crisis [10 Mar 2012]
Unit 2 Macro: Policies to Drive Economic Recovery [9 Mar 2012]
Unit 1 Micro: 50 years of anti-smoking campaigns and awareness [6 Mar 2012]
Unit 1 Micro - Labour Migration and the Economy [5 Mar 2012]
Unit 4 Macro: Sovereign Wealth Funds [4 Mar 2012]
Unit 1 Micro: Breaking Down the Cost of Gas [4 Mar 2012]
Unit 2 Macro: Might Oil Prices Bring another Recession? [4 Mar 2012]
Economies hooked on central bank stimulants? [4 Mar 2012]
Mortgage interest rates, LIBOR and game theory [3 Mar 2012]
Unit 1 Micro: Highest and Lowest Paid Jobs in the UK [26 Feb 2012]
Unit 2 Macro: A Man Regains his Self Respect [25 Feb 2012]
The Economics of Climate Change - Stern 5 Years On [21 Feb 2012]
Unit 1 Economics: Panorama - Poor America [17 Feb 2012]
Unit 2 Macro: The Dash for Gas in Mozambique [17 Feb 2012]
A return to Glass-Steagall to prevent another crash? A lesson from economic history. [17 Feb 2012]
ECONOMICS TEACHER RESOURCE NEWSLETTER
Join over 6,000 other Economics Teachers in the UK and around the world who receive the tutor2u regular Economics Resource Email Newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops + loads of great ideas for teaching economics from our blog authors.
