Question: Use the demand-and-supply model to explain and discuss the points about the housing market described in the ex
Posted: Fri Jul 01, 2022 8:13 am
Question: Use the demand-and-supply modelto explain and discuss the points about the housing marketdescribed in the extract.
Extract: UK enjoys property sales boom amid Covid-19pandemic
Hard-to-sell homes are being snapped up by the hundred asBritain’s booming property market maintains a year-long breaknecksales record.
In areas of high demand, even the most knocked-about andidiosyncratic houses are spending just days on the market oncebuyers, desperate to grab something, see that predictions of ahouse price crash are proving off the mark.
“Homes that look like the last turkey in the Christmas shopwindow are flying off the shelves at the moment,” said propertyagent Henry Pryor …
Andrew Wishart, property economist at consultants CapitalEconomics, said: “With the amount of secondhand stock on the marketcurrently extremely limited, house prices could continue tosurprise on the upside.”
There is always the possibility that places like Cornwall andtowns along the south coast are in a bubble and prices are about toburst, said Pryor, “but the banks and local agents seem convincedthat the momentum will keep prices on the up for a long timeyet”.
Mortgage lender Nationwide said its measure of annual houseprice increases chalked up its second-biggest monthly rise in 15years in August, putting to bed fears that the end of thegovernment’s stamp duty tax break, which prompted a fall in thenumber of homes changing hands during July, would bring the marketto a juddering halt.
Prices were up 11% on a year ago, said Nationwide, and remainabout 13% above pre-pandemic levels, according to officialdata.
Adding to the feverish activity, which has seen some Englishagents adopt the well-worn Scottish system of sealed bids amidclaims of gazumping, new home builders have battled steel andtimber shortages and an exodus of staff following Brexit toconstruct new homes. Many have seen their profits soar.
Wishart said the end of the furlough scheme on 30 September,which is expected to push unemployment higher, posed only a smallrisk to rising prices.
In May 2020, it was a very different story. The first lockdownmeant buyers could no longer view properties except online, sellerstook their homes off the market and sales collapsed.
Two months later Rishi Sunak responded to calls for governmentsupport by extending the help-to-buy scheme for first-time buyersand cutting stamp duty on homes worth less than £500,000.
Figures for August 2020 revealed a spectacular turnaround.Mortgage approvals jumped from 66,300 in July to 84,700, accordingto Bank of England figures, their highest level since October2007.
Recent analysis of the government’s actions by the ResolutionFoundation thinktank argued that the £4bn stamp duty subsidy waswasted on sparking a market to life that had already begun torecover and was always going to enjoy stellar growth.
It said ultra low interest rates, the demand for more spaciousproperties during the pandemic and the pent up savings of thosekept in work by the furlough scheme was enough to spur buyingactivity without extra incentives from the Treasury.
Source: Inman (2021)
Word limit: 900 words
Extract: UK enjoys property sales boom amid Covid-19pandemic
Hard-to-sell homes are being snapped up by the hundred asBritain’s booming property market maintains a year-long breaknecksales record.
In areas of high demand, even the most knocked-about andidiosyncratic houses are spending just days on the market oncebuyers, desperate to grab something, see that predictions of ahouse price crash are proving off the mark.
“Homes that look like the last turkey in the Christmas shopwindow are flying off the shelves at the moment,” said propertyagent Henry Pryor …
Andrew Wishart, property economist at consultants CapitalEconomics, said: “With the amount of secondhand stock on the marketcurrently extremely limited, house prices could continue tosurprise on the upside.”
There is always the possibility that places like Cornwall andtowns along the south coast are in a bubble and prices are about toburst, said Pryor, “but the banks and local agents seem convincedthat the momentum will keep prices on the up for a long timeyet”.
Mortgage lender Nationwide said its measure of annual houseprice increases chalked up its second-biggest monthly rise in 15years in August, putting to bed fears that the end of thegovernment’s stamp duty tax break, which prompted a fall in thenumber of homes changing hands during July, would bring the marketto a juddering halt.
Prices were up 11% on a year ago, said Nationwide, and remainabout 13% above pre-pandemic levels, according to officialdata.
Adding to the feverish activity, which has seen some Englishagents adopt the well-worn Scottish system of sealed bids amidclaims of gazumping, new home builders have battled steel andtimber shortages and an exodus of staff following Brexit toconstruct new homes. Many have seen their profits soar.
Wishart said the end of the furlough scheme on 30 September,which is expected to push unemployment higher, posed only a smallrisk to rising prices.
In May 2020, it was a very different story. The first lockdownmeant buyers could no longer view properties except online, sellerstook their homes off the market and sales collapsed.
Two months later Rishi Sunak responded to calls for governmentsupport by extending the help-to-buy scheme for first-time buyersand cutting stamp duty on homes worth less than £500,000.
Figures for August 2020 revealed a spectacular turnaround.Mortgage approvals jumped from 66,300 in July to 84,700, accordingto Bank of England figures, their highest level since October2007.
Recent analysis of the government’s actions by the ResolutionFoundation thinktank argued that the £4bn stamp duty subsidy waswasted on sparking a market to life that had already begun torecover and was always going to enjoy stellar growth.
It said ultra low interest rates, the demand for more spaciousproperties during the pandemic and the pent up savings of thosekept in work by the furlough scheme was enough to spur buyingactivity without extra incentives from the Treasury.
Source: Inman (2021)
Word limit: 900 words