Managerial Economics In A Global Environment

Current State of Housing Market in Britain

Discuss about the Managerial Economics in a Global Environment.

As things currently are 217 looks like will be a year not so favorable to housing agents. Some surveys conducted indicate that the price of housing is no longer rising. In Britain, home ownership is still being much sought after, but borrowing has never been cheaper. Competition amongst lenders in Britain has been driven down mortgage’s rates to that low level. Home ownership has fallen short since 2000 and even how it’s at its lowest level in the past 30years and even more, there is no sing of prospective buyers who are ready to take advantage of the lucrative deals on offer.One explanation to this is that rising inflation has made people feel worse and having negative effects on the housing market. Another reason is that Brexit has made people fear to have financial commitments, but neither of the two is convincing

The better off explanation that can account for the low levels of prosperity in the property market is that houses are simply expensive for the new buyers even with the mortgages rates going to as low as they are. According to the national statistics office, the average price for housing is 7.6 times the average annual salary which is more than double the figure 2 years ago. The bank wants to prevent excessive lending and has authorized lenders not to offer loans to people that are more than 4.5 times of the borrowers’ income

In such circumstances, only one of the three things can happen: either earnings grow as the house prices remain steady or earnings remain constant while house prices fall or the house price remain high, and the income growth declines. Similarly, there are no indications of any acceleration in the wage growth this will cause the market to continue falling until the time demand drops, supply increase or banks lessens its lending conditions. Higher interest rates from banks will kill the demand for housing property .houses are being sold to foreigners who have found their money, and this is due to the decline in the value of the sterling pound

Britain needs to learn from other countries that you don’t need to have rising house prices or even high levels of occupation for the owner of the houses to be wealthy.Germany to be precise has done just as fine as possible though seemingly has had lower levels of price inflation and a far bigger rented section with relation to Britain. Rising home ownership affects labor mobility and creates congestion costs which generate fewer new businesses

Reasons behind low levels of prosperity in property market

No evidence available can support the notion that buying a house means that one might lose his job some years later.

Sooner if not soon a politician is going to say that Britain got the housing policy wrong. They will demand that the housing regulation is stripped off from the local authorities and be handed to them. They will accept the current taxation system in Britain and encourage housing demand. That would literary mean disrupting the current property tax system and amending it which is the reason why it is not going to take place any soon. (Elliot, 2017)

1. Rates of income has effects on the purchasing power of the population
2. Low mortgage rates does not necessarily increase demand for housing
3. Owing of a house or buying of a house does not make it obvious for loss of job after some time

The government throughout the local authorities has held the housing price high, and that is just the mere cause held the housing market demand. The government nevertheless came up with a policy that would overhaul the housing prices. The government through the local authorities outlaid a way through which it would ensure that people get accommodation that meets not only their preferences regarding quantity but also cost. The government through its policy is also improving the quantity and quality of properties eligible for rent both in the public and private sector. It is doing this by allowing flexibility on waiting lists helping landlord stop fraud from tenants and anti-social behavior and providing more affordable housing by restricting housing providers to charging not more than 80% of the local market price. Also by funding the local authorities to refurnish their houses, using the tenant empowerment program to support tenants in playing a role in managing their accommodation and encouraging investments in the private sector. This is done through schemes like loan guarantees, partnering with different entities to create homes, jobs and encourage economic growth. The government also is catering for programs like affordable homes programs and regulation of housing association economically through searching of more private investments to make housing affordable.

The government has also has set up various regulatory standards that the registered housing providers both private, and public authorities must meet economic standards to ensure the value of money and rent, consumer standard to ensure tenants involvement and also empowerment. (Gov.UK, 2015)

The government is trying to come up with policies that will streamline the housing industry in the Britain and just change things. However, it should also be keenly noted that the government initiatives top try and curb the low housing rates in the country did not have a real big actual impact as it was projected by the government. Through consultations with various economic expertise, Emily Cadman and Chris Giles found out that the government policies that were initiated in 2011 did not just mean that it was an automatic win for the government and that it would cause an immediate change. Most of the experts who were engaged were of the view that no great impact should be expected from the introduction of the new housing policies by the government. (Giles, 2016) Similarly, that can even be proven now as there has not been any great change in the housing sector in Britain and fact, the situation is even turning from worse to even worse where though inflation is operating at nearly the zero mark the housing market in Britain still has not got the Midas touch yet. The implementation of the policies by the government started back then in 2011, and until today there has not been any effective change in the housing market.

Impact of Government policies

For instance, a professor from the Imperial business school going by the name Nick Bosanquet predicted that there would not be a positive change in the housing market. He rather  said that there would be experienced a negative change of about 20 to 30 percent in the demand market for housing in Britain and he attributed his predictions to the decrease in foreign demand which has become the main market for houses in Britain.  He even went on further to warn against more market instability despite the government policies being put in place. Another critic by the name Diane Coyle from the University of Manchester explained that there was no touch to what the government had done about the housing industry because the current policies that the government had put in place had nothing that could substantiate supply increase.

The article thought it puts into account some of the major economic policies it also does defy other theories. One of the most common policies that the article defies is the Microeconomic policy which apparently deals with policies that are targeted at the development of economic sectors and households (Elliot, 2107). The economic policy aims at ensuring the promotion of investment is achieved in the real economy through efficiency of economic institutions and productivity to raise the level of the people's living standards. The purpose of this economic policy is to identify and evaluate different applicable options that are working against the development of a given industry and at the end implement the issue. In fulfilling its actions, the policy helps create equity in the economy of a state or a country and even generate full employment among citizens of the same locality.

On the defying end, the article just gives a summary of some of the policies that are working against the housing industry like the high government borrowing rates set by the banks and low-income rate due to unemployment and other small determinant policies. Instead of the article to identify such policies and give recommendations on how the policies working against the prosperity of the Britain's housing market it just keeps into account the policies but does not implement the issue arising from the identified policies (Economicdevelopment, 2016). Though the article puts into account the fiscal policy which is seen where the government changes spending and taxation by increasing interest rates and the monetary policy it does not give a clear exploration and extrapolation of the two policies.

Conclusion

In summary, the government of Britain needs to come up with more applicable policies that will spearhead its Housing industry and foster it into prosperity rather than maintaining the current set policies which are yet to show any results. More so it is not Britain which is suffering from this problem but some other countries are going through the same, and they can use Britain to benchmark themselves and reach their desired milestones.

References

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Elliot, L., 2017. Zero house price inflation is to be welcomed not feared. The Gurdian .

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Gov.UK, 2015. Government policy: rented housing sector. [Online] Available at: https://www.gov.uk/government/publications/2010-to-2015-government-policy-rented-housing-sector [Accessed 21 April 2017].

Gov.UK, 2017. Housing-policy arears. [Online] Available at: https://www.gov.uk/government/topics/housing [Accessed 21 April 2017].

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Wilson, W., 2017. Stimulating housing supply-government inuitiatives-parliament.UK. [Online] Available at: https://www.researchbriefings.files.uk/documents/SN06416/SN06416.pdf [Accessed 21 April 2017]