House price inflation

Introduction

House price inflation in the uk has been particularly high in recent years. This has led to much discussion concerning the future path of house price growth. Housing is for many household in the uk are largest expense and the most important asset for all house hold it is an important determinant of quality of life. Determine the level of new housing in a particular sector. It might be expected macroeconomic factors have some influence main point rates, rates of inflation etc...

History of nominal and real house price in the uk between 20007 - 2009 nominal house price. The main difference in the mode of land supply has consequence for the way private housing suppliers called as “labelled” &” contractor” both are most important role in housing making .

Ray Barrel(nd) “Journal artical”,available at www.questia.com last accessed on 18th Feb 2010.

Demand:

demand means when the customers need or want a lot of a certain product. Demand is not only in single unit, it can be a good, service or in other form. There is also a graphical recreation of the demand in economics. Here price is on vertical axis and quantity is on horizontal axis

Low of demand:

one of the first thing economic is the basic law of demand. The low explain functional relationship between the price of commodity and quantity demand are same .it is observation that price and demand are inversely proportional means both are in opposite direction. This graph increase in the price the demand is decrease.

Available at: www.economicshelp.org/blong/housing

Factors determine the demand:

1. price of main product
2. price of other product
3. Income
4. Population
5. Preference
6. Future price expectation

Supply: supply is a schedule showing the amount of a product that producers are willing and able to make available for sale at each of a series of possible price during a specific period .means a graph showing the relationship between the price of a good and the quantity of the good supplied over a given period of time.

Law of supply: the law starting that all other factor remains equal, the price of good means the graph is increase, the stock of good means supply , increase. In the law price and quantity is directly relation means in positive direction. Price of good increase suppliers will gain more profit by increasing the stock on the house.

Available at: economics, john sloman,forth-edition,2000 personal education ltd. England.

The following factor is affect supply of the particular good in the future.

1. Price of the product
2. Price of the other product
3. Raw materials/ input price
4. Technology
5. Numbers of producers
6. Natural conditions
7. Monopolies
8. Fiscal policy of government
9. Future expectation
10. Calamites

Income of individuals demand: The income of the individual as affect the demand of the product. The demand is always supported by the income individual. In the current situation also it is a house price variable that it income is sufficient that the chance of demanding something is higher

Latest house price market figure show that the uk has at least emerged from the worst recession since the 30 but only just growth in the last quarter of 2009 was 0.1 % as opposed to the 0.4%that many analysis had expected uk house price recover more quickly means increase of house price.

Population: demand also on the size and age structure of the population. The larger the population, the greater is the demand for all goods and services, the smaller the population, the smaller is the demand for all good and service.

As population increase, the demand for good increase as well as because each members of the population has need to be filled however these needs change over time as segment of the population age and their wants and need change

Interest rate: house purchase is for the majority of people, the largest financial transaction of their lives and, since most people are able to fund the price of a house out of their own capital, a loan from a bank building society or other source is normally required.

Interest rates have the direct impact on the prices of the house in free market. Talking about uk, the bank of England set the interest morate for whole economy so for house as well. Interest rate are very important as mortgage repayment are normally the major part of homeowner's monthly expenditure. some following point of interest.

1. Some people have stable mortgage interest rates, will be less false by any way transform in interest rates in general as their agreement is fixed. but it and time changing their contract the current advance. they will have to agreement with new and modern rate of interest.
2. Interest rate is also important to real interest rates.
3. In interest tax as of time to time postponed effects are and been experienced. As for an request, increase in interest in last year is sad more than this year so it depends on the advertise feel as well
4. it can be the only way for first time buyers to obtain to the property steps and keep their mortgage payments reasonable.

The cost of mortgage interest expense depends on the interest rate as for example the bank of England. When the cost of mortgage of housing then individual rate of housing rate. In 1992 interest rate minimum 12% this reason decreasing in demand for housing and house price decrease. Today all in uk bank (2009) interest rate low in (1.5).this reason demand for house price is very low

“property market prediction”available atwww.marketoracle.co.uk/article8080.html last accessed on16th Feb 2010

www.mortagageguide.co.uk/ukhosing/market/factor last accessed on 16th Feb 2010

Unemployment: when extra public are employed. Extra people are also able to pay for homes, and housing price ,in turn enlarge. And on the turn overside,as unemployment increase and consumers fell unsure about their future, housing price will fall because of a decrease in demand.

www.ehow.co.uk(list_5904815-factor)

The combination of rising without job less person and every weak implement of earn growth is sad news for the housing market next strong connection between un employment and the housing market. when unemployment is increasing ,demand for buying a house should be go down. Most important point if people are unemployment they will be not capable to pay for mortage payment. But ,if people fright individual complete out of a job. they should be keep away from pleasing on the risk of mortgage.uk labour market has ensured that some of the pain has been shared in earning rather than just employment level. And earning increase is possible to remain subdued, given the extended of a prolonged period of decreasing target inflation. The house price to income ratio new postion at 5.0 decreasing and higher to 2007 but today situation higher than the average of the ancient time 20 years years which situate at 4.4. out estimation of the variable ‘'fair value'' of house price. This variable described such as unemployment and house hold incomes. As well as interest rates, demographics and housing supply suggest that price it is only 5 % under value. This percentage compare with an overvaluation of 12 % at the beginning of last year. Future price expectation. If the price of a good is expected to rise in the future and if the good can be stored the return from selling that good in the future is higher than it is in the present. Similarly it, if the price of the good is expected to fall in the future the return from selling it in the present is high relative.

A concentrated an enhancement in UK housing property market is in probable previous to 2012 but house price will end of the year 2 % top than at the create.

Following and up and down 2010 the market is predictable to see a partial increase in price in 2011. And no continued improvement awaiting 2012. The pleasure caused by increasing price in new month has secreted the basic that have contributed to this presentation. The UK housing market place is expected to reject by at least 15 % throughout the next 2 years. Even thought the 2012 Olympic, London is predictable to go down as a great deal as 25 % UK concentration tax are moreover at or very near a high, as there is an more and more moving back possibility of a added increase in October 207l. After next year high interest rate minimum 5 % during the next half 2008. The implication for this are that the UK financial organization interior growth for 2008.