The Economy of House Price Growth in the UK since 2018
The essay constitutes information that is relevant to the given topic and concentrates mainly on the economy of the United Kingdom. There are two main pillars in the science of economy which are macroeconomics and microeconomics an in this essay both of the understandings are clearly evaluated remembering the context which is the United Kingdom. The theoretical foundations which are found in the economics related to the actual events and policies that are found in the economy which is slowing down because of different factors are also discussed.
It can be seen that since 2018 the house price growth in the United Kingdom has been slowing down in a significant manner and due to this, the economy of the UK is not stabilizing. In this paper, the discussion is taken up on the impact on the circular flow of income and the national output which can be seen in the United Kingdom due to the economic recession that is happening because of different reasons, and the main issue is selected as the house prise conditions. The paper contains revues of literature where background information is given an explanation of the topic is given as well as the reasons why the economy is being affected are also evaluated. In the discussion, frameworks will be found and several reasons for economic performance will also be evaluated.
Since 2018 it can be seen that the house price growth rate of the United Kingdom has been slowing down in an increasing manner and it can also be seen that the total number of transactions that were associated with the tractors is also failing. As the transactions are failing and the house price growth has been slowing down the individuals usually invested their shares or have interested in house price-related factors are getting less comfortable and confident about their wealth and this is the reason why they’re not spending much on this factor. It can be seen due to this reason heavy impact is falling on the circular flow of income and the national output (Zhang et al., 2020). Now for this reason the economy of the United Kingdom is also getting affected because the house price growth has been slowing down. To continue on evaluating the several factors of the economy in the United Kingdom the background has to be known in a specific way.
The context of background will include the economy of the United Kingdom as well as the background in the house price system of the United Kingdom (Muellbauer, 2018). It can be said that the economy which is seen in the United Kingdom is pretty much developed and is extremely popular in the social market. The UK shows certain characteristics of the market-oriented economy and it can also notice that the united kingdom is considered to be the sixth Largest country that comes in the national economy and this criterion is measured by the gross domestic product also known as GDP (Gibb, K. 2016).
It can be seen that the economy of the United Kingdom has been growing in a sensible manner but it can also be noted that there are some points that influence the economy of the United Kingdom in a positive as well as negative manner. Coming to the point of house pricing in the united kingdom’s it can be seen that the properties have a particular amount of price and it has been constant from the past few years (Woods, 2017).
The house pricing in the UK has also contributed to the whole economical system of the place but from 2020 it can be seen that the economic system of the UK is getting clashed and the pricing rate is decreasing due to many reasons and as a result, the whole revenue has been affected. There are certain weaknesses and conflicts that can be seen in the economy related to the house pricing environment in the UK.
The first problem that can be noticed is the low growth of the economy seen from the last few years and which group has been particularly stagnant (Tassinari & Maccarrone, 2020). The second conflict that can be seen is the poor rate of productivity growth since the last decade and which is affecting the long term prospects of growth in the United Kingdom.
The manufacturing sector related to the housing growth as well as the different spectrums of the United Kingdom has been slowing down from the past few years which are affecting the total revenue and economic generation (Van Reenen, 2016). Coming to the context of the housing market it can be seen that in recent years the prices have gone up to an expensive way and the rents are also contributing to inequality. All these factors contribute to the different types of weaknesses and conflicts that are seen in the economy of the UK and the prices of housings are also getting differentiated because of the matters (Martin et al., 2016).
The housing market always affects the economy and it can be seen in a global range, in this context, it can be seen that the UK has faced terrible effects when the pricing of the houses went high and it also affected the economy. When the house prices usually raise it encourages the consumers of the United Kingdom to spend in the wealth that is affordable. When there is a sharp drop seen in the house prices the confidence of the consumers and the construction as well leads to the slower growth of the economy (Salemdeeb et al., 2016). As when the house prices fall the contribution to the economic recession also increases.
It can be widely seen that as the house prices are raising it can also be considered as the redistribution of wealth which is happening within the economy of the United Kingdom. The increasing wealth of the different types of homeowners and primarily older people in the United Kingdom are reducing the living standards effectively for those types of people who actually do not own a house and are often young (Lorusso & Pieroni, 2018). All these problems and recessions are leading to a decrease in revenue in an economic manner. Even there are certain Causes that can be seen as in the wealth effect which also did distributes on the factor of spending borrowing of the house, rents, interests, etc. There are even different types of the diagram given to support the objections and evaluations which have been made (Cooper & Hammond, 2018).
The circular flow in income is extremely important for the economy in the United Kingdom. There are certain factors in the circular flow of income that contributes to the whole scenario of the economy of the UK. The circular flow of income can be described as the term which it is representing the money flow between the two main sectors or groups of society which are the producers also known as forms and the Second are consumers who are known as households (Zhang et al., 2020). In the circular flow of income, the two fundamental part takes themselves together in a process of satisfying the different needs of human and by that the economy is also satisfied in a particular country.
It can be seen that in a free market of the economy two components are extremely important or also known as sectors (Zhang et al., 2020). People coming from the households work for the different types of firms as in selling their services or products etc and in return, they receive wages or salaries.
If the scale of the whole part of the economy is accumulated then it also can be known as the national income. And the total amount which is taken as the income earned over a given time is directly related to the economy of that place (Cooper & Hammond, 2018). A person who is spending on home food entertainment etc returns to the form or the industry an in this way a circular flow is generated. In this given scenario of the economy of the United Kingdom, it can be seen as people are not investing and the prices are not stabilizing in the housing area the circular flow in this sector is getting damaged and interrupted (Salemdeeb et al., 2016).
The GDP which is also known as the gross domestic product is considered as the monetary value of the different types of goods and services made within a specific period of time and in a specific country And in this specific scenario the United Kingdom is the country whose GDP Will be calculated. The statistics of the United Kingdom and the economical background it can be seen that the GDP is quite high and the numbers also seem to be pretty good (Salemdeeb et al., 2016).
All these things generate profit to the United Kingdom but it can also be seen that if the house pricing industry does not go well then it will affect the GDP and there are also some areas like the Labour market unemployment if those are not looked into in a proper manner it will also affect the different sectors of GDP in the UK (Martin et al., 2016). There are certain sectors that contribute directly to the GDP of the United Kingdom and those sectors are manufacturing construction services and tourism. In this place construction services etc directly related to the house pricing industry of the United Kingdom and which is seen to be slowing down.
The Labour market always represents the factor concerning humans and which is extremely important for producing different types of goods and services as well (Martin et al., 2016). All these factors are directly related to the economy and if enough people are not found to meet the perfect skills and to meet the demand which is increasing day by day then economic growth will decrease.
Even in the house pricing criteria if enough Labour is not met for the construction it can affect the economy of the United Kingdom in several ways. Another factor is unemployment (Tassinari & Maccarrone, 2020). Unemployment is such a factor that affects the different spectrums of the economy and it is also seen in the United Kingdom. it can be said if people are unemployed they won’t be able to afford houses and that is why the house price will go down, along with that it will also be seen that the circular flow of income will be interrupted if employment increases in a particular country (Tassinari & Maccarrone, 2020). So the economy can be affected by unemployment in the United Kingdom.
There are certain policies frameworks practices etc which can uplift the economy of the United Kingdom and also help the country to focus on the increase in revenue. The framework which has been selected for improving the economic condition of the United Kingdom is the smart growth economic development. In this smart growth economic development, there are five factors that are needed to control the framework and innovate the economy (Woods, 2017). The first factor is selecting the focus area where a particular area or place is selected where the economical condition is getting worse after that context is defined on how the economy will be improved and what is the point which needs to be mended after that Goals are set which will be achieved, as the fourth method the existing barriers an assets are identified and last but not the least the right tools are used to improve the economic condition (Woods, 2017). There are also certain policies for economic development such as microeconomic stability, foreign aid, development of manufacturing, investment in public sectors, effective tax collection, and deregulation.
To conclude with the paper constitutes information relevant to the given topic of the essay which is the economy of the United Kingdom and how the recession of house rate and the price is affecting that. The information which has been provided in the essay is taken from famous articles and journals. The essay can also be used in further research related to this field. It can be seen that since 2018 the house price growth in the United Kingdom has seen a recession and that has also affected the whole economy of the United Kingdom. In this paper, several reasons for the recession have been discussed. In the literature review, the background information of the topic the weaknesses, and also the conflicts are evaluated. The explanation and the slowing house price growth of the United Kingdom are also discussed and how it is affecting the economy is also evaluated. In the analysis and discussion, part of the essay different frameworks and policies which are associated with the United Kingdom’s economy and how it can be afflicted are also discussed. There are also certain reasons which stands behind the fall of the economy in the United Kingdom and which also encourages the slowing growth of house price and they are also evaluated.