COURSEWORK 2 Assignment Example | Topics and Well Written Essays - 2500 words

COURSEWORK 2 - Assignment Example Owner-occupied housing includes property that is owned by private entities and have those private owners as the occupiers of the housing. Of the total number of households in the United Kingdom in the year 2010, about 17.8 million were households that were properties occupied by their owners, the biggest slice of the pie in comparison to privately rented households, households rented by the local authorities, and the households that are managed by the housing associations. The rise in owner-occupied housing is reflected in the fact that those figures for this categories represent about 65.5 percent of all households in the UK, up from about 70 percent in the initial part of the current century. This figure represents an elevation from the average percentage of owner-occupied housing for all of the European Union. These figures are reflected in the chart below (Economics Online 2013). Graph Source: Economics Online 2013 On the other hand we get a glimpse of the total picture of the ho using market in the UK at present from several proxy indicators of health, including for instance the affordability of housing relative to the income or earnings of UK workers. This latter figure is a representation of the potential demand for housing, where for instance higher ratios of house prices to worker earnings translate to lower affordability owing to the reduced capacity of workers to purchase homes, and therefore lowered demand, and lowered ratios conversely translating to higher demand owing to the increased capacity of workers to purchase houses, all other things being equal. Of course in reality there are other factors that impinge on the ability of workers to purchase houses, such as the availability and affordability of credit to finance the housing purchases. That said, and more into that later, the following is a chart of the house prices to worker earnings ratios in the United Kingdom from 2002 to 2012 (Riley 2012): Graph Source: Riley 2012 In the plot above, we s ee that the prices to earnings ratios for property in the UK spiked from 2005 to its peak towards the end of 2006 and the beginning of 2007, before sharply declining from that point to 2009, where prices to earnings have been in the doldrums. On the one hand we see that the ratios should indicate a higher uptick in ownership from the lowered ratios, but we also get from the literature that the financial crisis in 2007 and the continued weakness in the UK economy from that time all the way to the present has generally resulted in a subdued interest in housing purchases in the country. Those two factors together has kept access to credit difficult, for one, while a generally depressed economy has affected consumer sentiment negatively (Riley 2013; Thomson and Bryan-Low 2013; BBC 2013; Ranscombe 2013). Graph Source: BBC News Following up on the last line of though, in the plot above, we see that the economy has not been doing well as of the past several years, contracting for five stra ight quarters on the tail of the severe financial crisis in 2007 and 2008, and barely avoiding a triple-dip recession in the most recent quarter. This general state of affairs has a heavy bearing on the supply and demand dynamics for owner-occupied property in the United Kingdom, as this paper will demonstrate in greater detail. Taking a step back, we see