Economic Report Essay Example | Topics and Well Written Essays - 2500 words

Economic Report - Essay Example As people find gainful employment, they may get married and settle down, or alternatively call their friends and neighbors to the new cities. The engines of economic growth thus provide an impetus for housing as people look for or develop suitable establishments that can be called a home or a place of residence. In turn, demand for housing units signifies that there are economic opportunities in a certain area. It must also be seen that the housing sector itself is a provider of gainful employment to a number of other industries such as masonry, steel, plumbing, water, power and other utilities, painting, upholstery and what not- the list seems endless. Once we have become aware of this, we can truly see the importance that demand and supply for housing units will have and does have on the economy of any nation, including Scotland. This paper is divided into three parts. Part A will present an analysis of the Scottish housing market for the first decade of the new millennium (2000-20 10). It will look at the major factors affecting demand, supply and price of housing units. In the process of analysis, it will also seek to determine whether the housing sector in Scotland is volatile or not and what are the reasons for this. Part B will go on to review specifics regarding the reasons for the ups and downs in the housing sector. Part C will differentiate between factors that are indigenous to Scotland and factors that may affect the whole of the UK housing sector. It will then end with recommendations to be implemented that when done, will hopefully reduce the volatility of the housing market in the UK in general and in Scotland in particular. PART A Analysis of the Housing Market in Scotland (2000-2010) Available data shows that the average number of new housing units established per year in Scotland since the 1980s was 20,000 units; these have however peaked at 25,000 in 2007 and there has been a decline since then to around just 17,000 units in 2010. This declin e was seen in the years 2009 and 2010. The average UK house price was ?163,244 at the end of 2010, with London being the most expensive region in the UK overall, and Edinburgh leading the price rise in Scotland. In Scotland, the average price of a house was ?137,491, indicating a decrease of 2 percent over 2009. Aberdeen City and Aberdeenshire were areas that had recorded a housing demand growth of 4 percent over the year ending December 2010. These areas have benefitted from strong and stable economic opportunities. Conversely Dundee, Angus, Lothian and Falkirk have been the lowest performing areas where demand fell by as much as 3 percent in the 12 months ending December 2010 (Scottish Housing Market Review, 2007 & 2010). Major Factors Affecting Demand, Supply and Price of Housing Units A look at the housing market in Scotland over the last decade (2000-2010) indicates that there have been some major factors affecting the demand and supply for housing units over the stated period. Generally it has been seen that demand for housing units has been spearheaded by the changing demographics in the cities, the economic climate and rates of interest and inflation. The opportunities for employment and living conditions impact upon the rate of migration of people to the major cities, and the number and types of housing units demanded are also dependant