Housing Economics2021-06-01T14:13:09+00:00

Housing Market Economics

Norton Taylor Nunn can provide you with a professional, independent assessment of the housing market economics position of a Local Planning Authority, and has a track record of winning cases with the Planning Inspector by successfully challenging an LPA housing position.

    Looking for professional housing market economics advice in London and Suffolk? Get in touch

    What is Housing Market Economics?

    Housing market economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of prices, supply, and demand. The closely related field of housing economics is narrower in scope, concentrating on residential real estate markets, while the research of real estate trends focuses on the business and structural changes affecting the industry. Both draw on partial equilibrium analysis (supply and demand), urban economics, spatial economics, basic and extensive research, surveys, and finance.

    Contact Us

    Norton Taylor Nunn can provide you with a professional independent assessment of the housing market economics position of a Local Planning Authority, and has a track record of winning cases with the Planning Inspector by successfully challenging an LPA housing position.

    • We work alongside our specialist residential and market research teams, valuations, property agents, development appraisal experts and planners to ensure comprehensive advice is provided nationally, across all property sectors, for all types of projects.

    • Our strong track record in combining planning and valuation skills with socio-demographic and economic analysis to provide a robust evidence base has been effective in influencing planning policy and decision making at all levels, and stages of the planning process.

    Housing Market Economics FAQs

    What is the development plan?2019-12-31T00:20:01+00:00

    Each local planning authority is required by the Town and Country Planning Act 1990 to prepare a development plan for its area. Although the structure and content of plans have been amended, the basic principle remains the same.

    The plan should set out a strategic vision for the area and be subject to an environmental assessment.

    Environmental assessment is a process that ensures significant environmental effects arising from policies, plans and programmes are:

    • identified;
    • assessed;
    • reduced;
    • communicated to decision-makers; and
    • monitored.

    It also gives you a chance to have your say.

    The plan also contains local policies for land use. Certain areas are selected for future uses. These local policies consider how those uses should look, operate and interact with the environment are set out in the plan.

    When a local planning authority receives an application, the first aspect it should consider is whether or not the development follows the development plan. If it would, then normally the application would be approved – although other considerations, such as representations from the public on planning issues, may lead the authority to decide otherwise.

    You should be able to view your local planning authority’s development plan, on the authority’s website.

    Check out the nidirect website for more information about how development plans set out how an area should look in the future by deciding the type and scale of development and where buildings should be allowed.

    What is the housing market in economics?2021-06-23T11:37:39+00:00

    In UK economics, the housing market refers to the national supply and demand for houses. Key metrics of the housing market are average house prices and their trends. The UK housing market refers to all housing, including privately owned homes, privately rented and local authority rented accommodation, and managed properties.

    A change in house prices affects the value of household wealth, creating a positive or negative wealth effect. A positive wealth effect means that, following a rise in house prices, the ratio of the market value of the property to the debt on that property (i.e. mortgage) rises, creating an increase in equity. This can trigger housing equity withdrawal and can be a significant boost to consumer spending.

    How often does the real estate market change?2021-06-23T11:38:08+00:00

    The real estate market is continually affected by many different variables which make house prices go up and down. You can see minor shifts in prices each month, however, the large, significant changes in the housing market caused by natural fluctuations in the market sometimes show only after 3-6 months.

    Depending on the factor that is pushing the price up or down, the speed of response of the housing market will vary. For example, when the first lockdown restrictions were introduced in the UK back in March 2020, the housing market was fast to reflect that change, dropping by two percentage points in April – such a sharp dip from 2.7 to 0.7 has not been experienced in a few years prior. On the other side of these lockdown restrictions, as things began to open up slowly, the housing market experienced an upsurge. After the initial increase to 2.0 in July 2020, the house prices shot up to 7.6 percent between July 2020 and November 2020.

    How does the real estate market work?2021-06-23T11:38:52+00:00

    The real estate market refers to the assets made up of properties and the land that they sit on. In the United Kingdom, the real estate market includes buying and selling real estate, renting or leasing real estate, or performing real estate activities on either a contract or fee basis.

    The real estate market can be divided into residential and commercial and is a major part of the UK economy. Just like any asset, the housing market is also affected by supply and demand fluctuations. The law of supply and demand dictates the equilibrium price of a property. A low supply of housing inventory may drive prices up, which is what tends to result in bidding wars. A specific property may be in demand by multiple parties who all try to outbid each other by increasing their purchase price offer.

    The bidding war ends when the seller accepts one of the offers, which then also removes a unit from the available supply. When there is a high demand for properties in a particular city or state combined with a lack of supply of quality properties, the prices of houses tend to rise.

    On the other hand, when a weak economy and an oversupply of properties lead to low or no demand for housing, the prices of houses tend to fall.

    How much did the housing market crash in 2008?2021-06-23T11:39:21+00:00

    The global financial crisis in 2008 saw financial markets lose up to 30% of their value over a short time period. This period also ranks amongst the worst in the global real estate market, with the UK housing market crashing almost 20%. It was the largest annual drop on record.

    There were some variations in the different regions and parts of the UK. While Northern Ireland recorded a 34% drop in prices, the Scottish market dropped by just 8%. In England the largest fall was in East Anglia, where prices were down by 16.6%, followed by London and the south-east where prices dropped by more than 15%. The smallest drop was in the north of the country, where prices were down 11% year-on-year.

    How does the housing market affect the economy?2021-06-23T11:39:48+00:00

    The variability of the housing market has a direct impact on the economy. When the prices of houses rise, this encourages spending as people’s assets are worth more. With increased spending, more money is being pumped into the economy leading to economic growth. This refers to the positive wealth effect.

    The positive wealth effect also suggests that in such scenarios these homeowners are able to release some equity by borrowing more against the increased value of their property.

    On the flip side, when house prices are falling, the economy is showing us a negative wealth effect. When house prices fall, people tend to cut their spending as consumer confidence is affected negatively. As a result, the economic growth shrinks and may eventually lead to a recession. Falling house prices cause more people to be trapped in negative equity (a situation where your house is worth less than an outstanding mortgage). This causes a fall in spending and precludes any opportunity for equity withdrawal. Additionally, falling house prices have a negative impact on the construction of new houses.

    Not all Advice will Require a Town Planner

    We can also help you find the appropriate architect or designer of your scheme, along with other consultants who may be needed, from transport planners, heritage planners and environmental consultants, right through to architects, technical draftspersons and/or designers.

    Contact us today

    We don’t just Offer Housing Market Economics Advice in London & Suffolk…

    We have the tools and experience to help your vision come to life. No project is too big or small. We’re always happy to  give professional town planning advice and talk about how we can best serve you.

    Planning
    Applications

    We work with you to help secure planning permission for your project.

    Learn more

    Planning
    Appeals

    Nortan Taylor Nunn win a majority of the planning appeals we undertake.

    Learn more

    Planning
    Enforcement

    We can help if you’ve been refused planning permission or received an enforcement notice.

    Learn more

    Planning
    Objections

    We can help you prevent that inappropriate development or extension.

    Learn more

    Strategic Land
    Development

    Nortan Taylor Nunn work with partners to unlock the full value of your land.

    Learn more

    Housing
    Economics

    We have a track record of winning cases with the Planning Inspector.

    Learn more

    Request Housing Market Economics Advice

      Looking for expert housing market economics advice in London and Suffolk? Get in touch with us

      Go to Top