Business Economics Essay Example | Topics and Well Written Essays - 3000 words

chore Economics - Essay Example(Hay, 2009, p. 461) The bubble formed by the housing price was the initiator of the habitual global economic crisis brought over to the whole world. What initiated the crisis was the bursting of the kin price bubble in the United States and the job was magnified by the aggressive owe lending prices. The housing grocery or the real body politic market comprises of several differentiated markets as the owner occupied market, rental housing market, urban descent properties market that is the factories, shops and the offices, the agricultural land markets and the recreational properties. There are five main antecedents that are held prudent for the house price bubbles they are low inte easing rates, development of new and innovative financial products which facilitated the accessibility of the credit, the tax treatment was also in favor of the debt-financed and owner-occupied housing shortage in the bring home the bacon of land in the attract ive urban areas, ontogenesis in the purchase of houses as a rental property or for speculative purposes. (Muller, Almy, Engelschalk, 2009, pp. 17-20 UK Economy in Worst Crisis in 60 years, 2008) The Housing market Crash The UK housing market The real house prices give grown stronger over the past years, which have been volatile accompanied by macroeconomic fluctuations. The UK Housing market has gone through significant agitation since the early 1980. In the period between 1982-1989, the market experienced a rapid rise in the housing prices, but meanwhile the housing prices showed a downward trend during the period 1990-1992 resulting in house price inflation. Accruing to the high economic proceeds in the years 1992 and 1993, the housing market in UK witnessed an increase in the average house price inflation, which originated in London and the South East region, which had a riffle down effect towards the north. The UK housing markets are the result of the personal sector wealth proportion, which was invested in the owner occupied dwellings. The UK owner occupied dwellings accounted for 20 percent in 1960, which increased to 40 percent in 1990s. Highest owner- occupation rates and the lowest private renting characterize UK. The main reason which drove the financial turbulence in the housing market in 1980s are the liberalization of the financial markets and the form _or_ system of government of Right to Buy which ensured the transformation of the population from the rented house to the private own occupied house. The increase in the competition among the lenders resulted in the fact that the borrowers get loans. This resulted in an increase in the household sector mortgage indebtedness from 25 percent in 1980 to 75 percent in 1992. The average mortgage cast out reached its highest 60.1 percent in the year 1986, and thereby remained at a steady 58 percent for the rest of the 1980s. The house price inflation was fueled by the amalgamation of factors like i ncreased in gather up for housing, rising incomes, and an increases in the competition to supply mortgage lending. (Figueira, Glen, Nellis, 2005, p. 1756 UK house prices drop like a rock, 2008) The reason behind the crash The main reason behind the UK housing crash was its serendipitously stumbling upon the economic growth trajectories, which were mainly consumer-led and private debt financed in the early 1990s. Both