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An Analysis of the Key Macro

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An analysis of the key macro and micro economics factors which impact on the current UK housing market
This paper explores the current situation in the UK housing market. Fundamentally, the paper argues that the current situation in the housing market is a legacy of the way in which the housing market developed over the early 2000s into the 2007 and 2008 financial crisis. As the fall out from this crisis has taken two or three years to properly be felt it can currently be said to be exerting a major influence on the way the housing market in the UK is working today. The paper therefore places a major focus on developing an understanding of how the financial crisis occurred and the impact that this had on the UK housing market, in order to understand the key factors which are shaping the housing market today. The paper begins with a look at the state of the UK economy at the moment. This is only examined in brief but provides a key background to the work. This is then followed by a look at the UK economy and the housing market and how the two link together. The following section is the major section of the work as this focuses on the macroeconomic factors which have shaped the housing market. This section in particular focuses on the legacy of the housing market developments of the early 2000s. The following section briefly explores the microeconomic elements which have shaped the housing market – the major emphasis here is on the role of buy to let mortgages as a means of investing. This is then followed by the final critical reflection before the work concludes.
The state of the UK economy
Like most markets, the housing market is heavily influenced by the state of the wider economy (NEF 2010 p.65). However, interestingly, several economist have noted that in major economies including the UK, the housing market has moved “out of step with the business…...

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