The state of the real estate market in UK Essay

The state of the real estate market in UK - Essay Example This essay discusses that in the UK, the cost of paying rent went high. With this, demand for rental houses also escalated. A great percentage of investors joined in the real estate business with the expectation that they will amass a lot of profits from the business. The amount of rent went high at an alarming rate with the number of investors increasing. Baum & Hartzell indicate that the amount of supply for real estate as at 2010 was very low. On the other hand, CML indicates that in the year 2010, the real estate business was booming and was very profitable at that time of the season. According to business analysts, this kind of scenario is referred to as a profitable mix, an inclusion of both demand and niche in the supply. In relation to the failure of the real estate business, this concept has a great correlation with the increase in the need to create a supply chain for the increase in demand by the tenants. With the rent yielding a lot of profits, the market experienced an i nflux of entrepreneurs in the business of real estate markets. With time, the real estate became flooded with a lot of people claiming a piece of the market. At one point in the businesses, a good number of entrepreneurs were wiped out of business. This led to a decrease in the number of investors in the business due to the tough competition. At the end of 2010, the business faced a lot of challenges and was not considered profitable at all. This is a major indicator of the reasons the real business declined. 2.2. High building rates Despite the increase in population in UK and the number of willing investors in the real estate business, the building rates still remain high. The international standards, according to FSA (2009), did not meet the booming prices in the period of 2010, since the building regulations were extremely high. On the other hand, the population in UK was rising at a high rate; thus, alteration in the household sizes. Just like indicated earlier, it is the need to fulfill the demands of the market that led to an increase in the supply of the real estates. However, in the period of 2010, less people invested in the business during the economic recess. The returns from the business were extremely high to an extent, that the government recorded a deficit in the number of houses; thus, researchers and made a recommendation through the Town Planning Council that over 200,000 houses must be built so as to cover the increase in population. Donald & Mc Millen (2010) indicate that by the end of 2010, the real estate had recorded a deficit of around one million houses, a clear indication of the fact that investors had backed out for a more profitable business. On another angle, the amount of credit offered to the real estate businesses decreased to a great extent, rendering many businessmen with no other option but to get out of the market. With this in mind, Great Britain: H.M. Treasury (2010)