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The Property Market Development and Macroeconomy in the UK

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The comparison between the recovery of the housing market in the present crisis to those of the 1980s and the 1990s shows the present situation similar to that of 1980s than the 1990s(Sentance, 2010). The reports show a more positive balance of demand and supply for hose prices and investment than in the recovery of the 1990s(Sentance, 2010). The problems in the banking sector especially the interest rate problems are reported to have acted as a dampening factor on housing market prices (Sentance, 2010). Moreover, though in both the crises, the cyclical nature of the housing market is seen, the social, institutional and policy changes leading to the present crisis, which has affected the housing market, are obtained to be significantly different from that of the early 1990s.

The above discussion shows these to be very different for the housing market in the present crisis when compared to that in the early 1990s. Reports show a lack of liquidity in the commercial property market mainly due to the pricing uncertainty (Invisita, 2008). The lower economic growth is reported to have affected occupational demand except for City market (Invisita, 2008).

Moreover, the low economic growth is obtained to have damaged the rental values (Invisita, 2008). Falling prices and competition from the internet are obtained to have affected the retail sector. The decline in inflation is obtained to have affected positively retailer costs (Invisita, 2008). Shopping centres are obtained to have been more resilient in the recent economic crisis compared to the other markets (Invisita, 2008). The consumer confidence is obtained to have deteriorated worldwide especially in the UK which is obtained to have affected consumer confidence in the property market.

It is likely to have impacted the property prices (Rightmove plc 2010). In this essay, the comparison of the influence of macroeconomic conditions on the property market development in the UK in the early 1990s and since 2007 is discussed. The theoretical discussion shows the difficulty in a generalization of the impact of macroeconomic conditions on property market cycles.

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