Research Proposal
Waseem Edilby 3630489
Tutor: Upeksha Madanayake
Word Count: 5000
Working Title:
An investigation into the factors affecting the increase in residential property market value in London
Glossary:
RPM = Residential property market
Table of Contents:
1.0 Abstract
2.0 Introduction
2.1 Research Background & Rationale
2.2 Research Aim
2.3 Research Objectives
2.4 Research Hypothesis
2.5 Research Questions
2.6 Research Scope & Limitations
3.0 Literature Review
3.1
3.2
3.3
3.4
3.5
3.6
3.7 Population & Geographic Size of London
3.8
3.9
4.0 Methodology
4.1
4.2
4.3
4.4
5.0 Data Analysis & Findings
5.1
5.2
5.3
5.4
5.5
6.0 Conclusions
6.1
6.2
7.0 References
8.0 Appendices
1.0 Abstract
2.0 Introduction
2.1 Research Background & Rationale
The past 25 years has shown trends in London’s residential property market value that could’ve not been foreseen, London particularly has been facing a staggering increase in property value.
The average asking price for a property within London in 1995 (Westminster) was valued at £161,087.00, the average asking price 25 years later is £1,182,648.00 an increase of 634% (Home Data, 2020). Although the above graph data accounts for the Westminster area only, similar increase can be seen across London.
An article by John Kingham claims that the UK residential property are at a “historic high” John further claims the reasons behind this was due to the record low interest rates, the government introducing significant amount of money into the banks to encourage them to lend more & government schemes to help investors & the public to obtain loans. (John Kingham, 2018)
It is to be expected that the value/cost of products & everything in general is to increase with time & the consistent demand required as the population grows however the residential property market has increased far beyond expectations & inflation of its economy within the time period set.
Many factors have shaped the value of the residential property market of today which will be investigated within the research paper to understand how these factors have had a direct or indirect effect on the value of properties to provide an insight on why we have seen such an unexpected increase.
2.2 Research Aim
The aim of the research is to investigate & explore the significant increase in value of the residential property market within London over the past 25 years by understanding how & why the factors put forward have caused a direct / indirect effect to the increase in value.
- Research Objectives
Objective 1: to met be in the rationale
To investigate the factors that could have directly / indirectly affected the increase in value of the residential property market within London over a set period.
Objective 2: to be met in the literature review
To understand & review how each factor identified had individually affected the valuation of the residential property market within London over the past 25 years.
Objective 3: to be met in the findings & data analysis
To understand & analysis why each factor had an individual effect on the valuation of the residential property market.
Objective 4: to be met in the conclusion
To explore the current status of the property market valuation & its possibile future.
- Research Hypothesis
To be confirmed
- Research Questions
Question 1:
What factors caused the increase in value of the residential property market over the past 25 years?
Question 2:
How have the factors that have been put forward affected the value of the residential property market over the set period?
Question 3:
Why have the factors that have been put forward affected the value of the residential property market over the set period?
Question 4:
What does the research suggest for the future status of the residential property market in terms of value?
- -Research Scope & Limitations
The scope of the research conducted will be limited in order to obtain qualitive data over quantitative data.
The scope will further be limited to the residential aspect of the property market only rather than the entire property market. The research will be based upon residential properties within London particularly however research may represent the residential property market nationally as the factors identified would have likely had an influence on the market nationally rather than a specific location.
The scope of the research will lastly cover the value & price aspect of a residential property only as this is the theme of the topic.
Limitations of the research is that data can vary as value & price of residential property is demand derived based upon the aspects of the properties themselves & what a purchaser is willing to pay for it rather than a set known figure. Figures provided are an estimation of what the properties are expected or locally achieve.
3.0 Literature Review
3.1 Understanding the Residential Property Market:
The residential property market plays a major role in the UK economy, the construction industry as a whole accounts for 11-13% of the overall economy to which three quarter of new construction work is instructed by the private sector “driven by growth in the private sector, which equates to approximately three-quarters of new work.” (ONS,2020)
When considering the quantity of residential properties there are within the UK, the BBC claims “There are about 25 million homes in the UK” (BBC, 2020) of which 30% are outright owned by private landlord occupants, 40% are privately owned on a mortgage scheme basis & privately owned & rented. This leaves a remainder of 18% of all residential property owned by government / council “social housing” (Wikipedia,2020) These facts drive many small businesses due to the housing demand & renovation requirements of the residential property markets.
Property is subject to multiple interest from many different individuals & organisations therefore multiple factors could affect & directly increase the value of a property, the main factors that directly / indirectly affected the residential property’s price are to be investigated within this paper.
Understanding the problem of the increase in price within the Residential Property Market:
The substantial increase in the property price of the RPM has further segregated the high class from the working class in terms of affordability & being able to get onto the property ladder. The average working-class salary is £30,420.00 annually (GQ-Magazine,2020) The salary figure obtained was then input into a Barclays mortgage calculator to see what an individual with an average wage within London could potentially buy, the results were based on a deposit of £20,000.00 & monthly spending of £500.00. Barclays provided an overall mortgage lending figure of £85,957.00 (Appendix ?) which was inclusive of the deposit, £85,957.00 could not buy a storage room within London let alone a property to live. To further understand the problem, the figures was then buffed to an annual salary of £60,000.00 with a deposit of £30,000.00, this would be above average for an individual of the age range 25-35 attempting to get their first property. Once again, the mortgage calculator returned a figure of £250,812.00 inclusive of the deposit (Appendix ?), according to Zoopla’s database “The average price for property in London stood at £671,989 in March 2020. This is a rise of 1.51% in the last three months (since December 2019) and rise of 4.59% since 12 months ago. In terms of property types, flats in London sold for an average of £544,250 and terraced houses for £725,189. This is according to the current Zoopla estimates.” (Zoopla,2020) Certainly a 1 or two bedroom flat could be obtained for approximate £250,000.00 within the London area, however at a annual salary of £60,000.00 you would expect to be able to secure a loan against a small 3 bedroom terraced house which is not the case. The salary earned annually to property price ratio simply is too low.
Investigating the Factors:
To understand the increase of the RPM, an investigation into the following topics to understand how & why each individual topic influences the price increase of the RPM. By doing so each topic can be evaluated & concluded to whether it is a factor of contribution to the increase of the RPM.
The General Public.
International & national investors. – Stability
Government / Council – Planning permission, schemes etc
Banks / Large Organisations. (Mortgages, interest rates etc)
Political.
Population & Geographic Size of London
3.2 General Public
Please discuss the general public in terms of residential property & more importantly how the general public has affected the increase in value of the residential property within London over the past 25 years.
3.3 International & National Investors
Please discuss International & National Investors in terms of residential property & more importantly how the International & National Investors has affected the increase in value of the residential property within London over the past 25 years.
3.4 Government
Please discuss the Government in terms of residential property & more importantly how the government has affected the increase in value of the residential property within London over the past 25 years.
3.5 Banks / Large Organisations (Mortgages)
Please discuss Banks / Large Organisations (Mortgages) in terms of residential property & more importantly how the Banks / Large Organisations (Mortgages) has affected the increase in value of the residential property within London over the past 25 years.
3.6 Population & Geographic Size of London
Please discuss the Population & Geographic Size of London in terms of residential property & more importantly how Population & Geographic Size of London the has affected the increase in value of the residential property within London over the past 25 years.
Methodology
Data analysis & findings
Conclusion
References:
Appendix