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1.1 Background of the study
In the recent pandemic situation, the world economy is suffering from COVID 19, where there is increasing numbers of death across the globe. According to World Health Organisation or WHO, around 136 million cases have been reported and there are over 2.9 million deaths worldwide. The COVID 19 situation is a critical era, where it becomes difficult for the economists and government of the international nations to tackle due to huge spread of the virus and increasing death rate. The health and social care workers are working day and night to support the people with health care infrastructure, vaccines and other medications to protect their lives (Allen-Coghlan and McQuinn, 2020). Moreover, there are serious impacts on the global economy, which is deteriorating over the period of time. There is slowdown of economic growth and social development due to restrictions, government policy of lock down and maintaining social distancing etc., which further hamper the smooth economic activities around the international markets (Marona and Tomal, 2020). Hence, there is serious issue of COVID 19 on the socio economic condition, where the people are suffering from job loss, lack of educational program and learning activities, closure of renowned organisations due to huge loss, lack of foreign direct investment and deterioration of the business activities and international trade.
The housing sector is also affected seriously due to such pandemic era, where the demand and supply of the housing are fluctuating over the period of time, and it further hampers the real estate condition in long run. For example, the UK economy is suffering from 9.9% slump in 2020. The ratings agency believed the UK's government deficit for 2020 might equal 9% of gross domestic product (GDP), compared to 2% the previous year (Cvetković, Nešović and Terzić, 2021). Additionally, in 2021, the unemployment rate of the United Kingdom is expected to reach 5.6 %, as compared to 4.5 % in the previous year. Hence, there are negative impacts of COVID 19 on economic and social condition of the UK where the people are suffering through low wage, lack of job opportunity, unemployment, poor economic condition and lack of economic growth (Krarti and Aldubyan, 2021). The study is hereby effective to explore the condition of housing sector after such pandemic situation, by considering the economic and social condition of the UK. The housing sector of the international countries are affected due to several factors such as wage, numbers of workers and economic slowdown, which further help to analyse the situation of housing sector due to COVID 19 .
1.2 Research aim and objectives
The aim of the research is to analyse the impacts of COVID 19 on the housing sector. Through this study, it is hereby possible to identify the effects of such pandemic situation on the social economic factors as well as the housing industry across the globe.
The research objectives are
To review the socio economic effects of COVID 19
To analyse the impacts of COVID 19 on housing sector
1.3 Structure of the research
The research is conducted through different chapters, which are introduction, literature review, methodology, findings and analysis and conclusion. Though the introduction, it is possible to discuss the background of the study as well as develop research aim and objectives to improve understanding about the study. The literature review provides a scope to review the existing literatures related to the research which further helps the researcher to develop knowledge about the impacts of COVID 19 across the social communities in the housing sector. Methodology is important after that, to explore the right methods of conducting the study in a systematic way. The Findings and evaluation provide a scope to represent the findings and develop critical discussion. Conclusion represents the meeting objectives of the study and concluding statement of the research.
2.1 Economic impacts of COVID 19
The COVID 19 situation has adversely affected travel, employment, financial markets, a number of industries, and shipping. The financial market has been broken down with economic slowdown and lack of social development. The real GDP, interest rate and the investment opportunities slump over the period of time (Schnitzler et al., 2021). Sharp rise in unemployment, reduces consumer activities in the society, collapse of hospitality sector, collapse of tourism sector, decreasing government income and stress on supply chain management are the major impacts of this pandemic situation, where the government face difficulties to tackle the issues to recreate the economic activities and maintain stability of GDP. Because of coronavirus borrowing, economic decline, and lingering uncertainty over Brexit, the debt ratings of the UK becomes negative. The British economy is falling to recession with stock market slow down and fallen its values. Bank of England cut its bank rate of interest from 0.75% to 0.25% and on 19th March, it becomes 0.10% that is the lowest rate in the bank's existence (Rosenthal et al., 2020). The debt of the government is increasing and interest rate is falling down where the people are suffering from getting the interest income (Ejiogu, Denedo and Smyth, 2020). The GDP deficit becomes 9%, which was initially 2% in the previous year. The unemployment rate is also increasing over the period of time, due to increasing job loss, closure of the industries for huge loss and seasonal unemployment (Gillard et al., 2021). 1 million British workers applied for the Universal Credit benefit scheme and the unemployment compensation have been raised to 2.1 million. Hence, the economic condition of the UK is deteriorating due to recession and recent critical phase of COVID 19.
2.3 Effects of this pandemic era on housing sector
Housing health and over crowding
Housing health and overcrowding issues, where the landlords fail to manage the quality of housing due to the issue of maintenance and repairs. This pandemic situation raise concern about maintaining hygienic factors in the housing sector and it becomes difficult and costly for the landlord and the project managers in real estate to manage the safety and security of the people by providing the best quality housing (Nicola et al., 2020). The low income housing and vulnerable people are suffering from overcrowded areas and housings which are risky for them to survive in such critical phase of COVID 19.
Lack of workers
Construction industry and migratory workers, is another major effect of COVID 19, where the construction industry across the globe is deteriorating due to lack of availability of the labours, mainly the migratory labourer (GÖKER et al., 2020). Due to this pandemic situation, all the industrialist follow the government rules of lock down and social distancing, which has crucial impacts on the numbers of workers and the organisational activities. Due to lock down, there is absent of migratory workers, as they are sent to their own home with restrictions and support. On the other hand, the numbers of workers working in the company is also less as compared to the usual time, so that social distancing can be maintained (Chetty et al., 2020). During lock down, the real estate companies and the private organisations in housing sector close their operation which is also critical for them to continue their business.
Break down of the global supply chain
Slowdown of the global supply chain management is one of the major issues in continuing the business operational activities of the housing sector (Allen-Coghlan and McQuinn, 2020). Due to lack of transportation, the international trade is not conducted with the same pace as well as it becomes difficult for the companies to maintain global supply chain in such a situation of international lock down. Due to COVID 19 situation, the suppliers cannot handle their global supply chain and distribution network for which, the suppliers and distributors fail to transfer the products across the countries (Quinn and Laws, 2020). Hence, the breakdown of the supply chain has negative effects on the housing sector, where the real estate companies fail to arrange the raw materials for construction projects and this further make delay of the project.
High rate of Unemployment
Unemployment is another major impact of COVID 19 situation, where the people are suffering from job loss and lack of employment opportunities, which further increase the rate of unemployment in the country. For example, the unemployment of the UK is expected to rise 5.6% as compared to 4.5%, in the previous year (Zhang et al., 2020). The organisation conducts labour retrenchment as there is huge loss of the company to maintain the employee base as well as the growth the companies has been deteriorated with the practice of maintaining social distancing and lock down. Hence, there are lack of job opportunities in the economy and also the issue of job loss that raise unemployment issue.
Rising housing price and lack of purchasing power parity
Rising housing price and lack of purchasing power parity are also crucial factors to understand the effects of pandemic situation on the housing sector. Due to lack of accessibility of the raw materials, poor employee base, increasing costs of production and construction, increasing expenses of raw materials, difficulties in transportation raise the total costing of construction project where the management team of real estate set high price for their projects. On the other hand, due to poor economic growth, lack of social development, decreasing bank interest rate as well as low purchasing power parity, it becomes difficult for the individuals to afford the housing for their accommodations (Ejiogu, Denedo and Smyth, 2020). Hence, there is lack of demand for the housing due to high price and recent economic recession.
3.1 Data collection methods
Data collection method is important to be chosen efficiently to gather the authentic information and valid data related to the study. The research is about the impacts of COVID 19 on the housing sector and in this regard the researcher selects both the primary and secondary data collection method in order to improve in depth understanding about the study for further critical discussion. Through the secondary data collection method, the researcher aims at collecting the secondary information related to the study by reviewing the existing books, journals, newspapers and articles, where in this pandemic situation, there are huge range of articles and online published journal related to the impacts of COVID 19. On the other hand, the researcher selects the primary data collection method to gather first-hand information related to the study topic where the researcher chooses the interview strategy to collect important information about the effects of COVID 19 on the housing sectors.
3.2 Data analysis techniques
The two types of data analysis are quantitative and qualitative. In this particular study, the researcher selects the qualitative data analysis technique in order to evaluate the interview transcript of the managers. The qualitative analysis is beneficial to develop in depth evaluation and critical analysis of the interview transcript. In this regard, the researcher also chooses qualitative analysis, for evaluating the perception of the real estate managers by applying the secondary information. This practice will be helpful for this study to develop critical discussion about the impacts of COVID 19 on the housing sector.
Sampling is the technique of empowering the person in the research for successful collection of authentic data and information, so that it would be possible to conduct the study in a systematic way through critical evaluation and analysis. The researcher in this regard selects the interview strategy for conducting the study by gathering valid information. The researcher chooses to arrange interview with 3 managers of the real estate company in the UK, so that it would be possible to empower the managers and gather information about the COVID 19 situation in the real estate. There would be 5 open ended interview questions, where 3 managers are efficient to provide answers and share their experience in the recent pandemic situation.
4. Findings and evaluation
4.1 Data collection and findings
Through interview, the researcher aims at collecting authentic information about the effects of pandemic situation on housing sector, where the managers of the real estate company, UK will be empowered in the interview in order to share their opinion. There are 5 open ended questions through which the managers can share their perception about the COVID 19 situation.
1. What are the factors that affect the sales of real estate projects?
The major factors that affect the housing sector project are such as economic condition of the country, social development, GDP growth and interest rate on real estate loans so that the leader of the company can strategies their business activities and develop a project by arranging capital investment, retaining the workers and developing technical infrastructure.
The sales of the real estate properties are dependent on the interest rate of the housing loans, inflation rate of the country, employment rate and wage. The exchange rate is also important factor that affect the demand of the properties in the country. Additionally, the housing facilities are also important factor on which the decision of the customers’ depends.
There are lots of factors affecting the sale of the real estate properties in the economy which are complementarity and availability of basic amenities e.g. electricity, water supply, telecom services, as well as location and accessibility of other public services, transportation and health care. The macro economic factors are real GDP growth, employment rate and interest rate on loans.
What are the existing challenges in the real estate construction projects after such pandemic situation?
In the pandemic situation, the major issues are transfer of migrant labourers to safe place as well as lack of workers in the construction sights due to lock down and social distancing.
Economic recession and decreasing interest rate are the issue that slump the housing sector. Additionally, the other issues are lack of workers, increasing cost of raw materials and closure of supply chain management.
The challenges are such as break down of supply chain and distribution network, closure of construction activities due to lock down and lack of workers in the construction sites for maintaining social distancing.
3. What are the socio economic conditions of the country in COVID 19 situation?
The house prices have been falling throughout the pandemic situation, due to availability of housing projects that were completed previously and lack of demand for housing. The economic recession and lack of social developmental condition deteriorate the overall country position.
Lack of job opportunities and job loss further raise unemployment rate and it reduces the ability of the individuals to afford housing in such a critical situation. 85% of the housing project activities have been stopped in this phase due to lock down and social distancing. \
Increasing the interest rate of loans as well as decreasing the scope of earnings reduces the demand for private housing. There is increasing demand for social housing and renting in order to manage accommodation by ensuring safety and security.
4. What is your opinion about demand and supply of housing in the UK in such pandemic situation?
High profile building safety concerns, increasing cost of materials are the major reason of strict decline of the new construction projects, which reduces the supply of housing accommodations in the society. On the other hand, the demand among the remote workers is constant as they have secure source of income.
The demand for the housing accommodations is not increasing over the period of time, rather is decreases due to COVID 19 phase, where the individuals cannot afford the housing due to high price of the property as well as the decreasing purchasing power of the consumers for the issue of job loss, unemployment and lack of job opportunities in the economy.
Due to economic slowdown, it becomes difficult for the leader of the real estate companies to arrange capital investment fund due to lack of foreign direct investment as well as increasing rate of interest on loans. Hence, the new projects cannot be developed under such critical condition of lock down and social distancing. The demand for the remote workers, who have secure job, has the demand for property.
5. What do you think about the long run situation of housing estate after the pandemic era?
In long run, the housing demand will be increasing rapidly, due to availability of the housings in the economy as well as affordable price range.
After the pandemic situation, it is expected that, there will be increasing demand and supply of housing in the countries due to economic growth and social development.
There would be positive and sustainable growth in terms of economic and social development, where the demand for private housing will increase rapidly.
4.2 Data analysis
As per the findings, the housing sector is highly affected due to this pandemic era, where the major challenges are lack of communication, closure of construction project activities, lack of raw materials, break down of global supply chain and distribution network as well as transfer of migrant workers to their home (Rosenthal et al., 2020). These are the major impacts for which the construction companies cannot conduct their project activities in this critical phase. There is about 38% decrease in the housing sales, due to decreasing demand for reducing the purchasing power of the individuals as well as increasing unemployment rate. The macro economic factors such as decreasing GDP, purchasing power parity as well as increasing interest on loans and decreasing rate of interest in the country leads to economic recession across the international countries. It becomes difficult for the customers to afford housing though the price of housing is decreasing due to such pandemic era (Ejiogu, Denedo and Smyth, 2020). The economy will be recovering with high job profile, more job opportunities, industrialisation after the COVID 19 phase, which further increase the activities of housing sector leading high demand and supply of housing in the economy (Gillard et al., 2021). Capital investment in housing sector will also be increased in long run with sustainable economic growth and social development (Schnitzler et al., 2021). Hence, in short run, there is negative impacts of COVID 19 due to lock down, social distancing, industry close down and economic recession and in this context, it is expected that, the housing industry will be recovering with economic growth and social development as it contributes in government income and country’s GDP with major portion.
It can be concluded that, there is serious impacts of COVID 19 on the housing sector, where the demand and supply of housing are affected critically. As per the findings, the major challenges are closure of construction projects due to lock down, lack of arrangement of raw materials due to break own of global supply chain management, job loss due to business slow down and lack of workers at the sights due to remote working facilities and transfer of migrant workers. In future, it is expected to improve the condition of housing sector, by increasing demand and supply after the critical pandemic phase, where the construction companies can again handle their supply chain and hire experienced staff members for working efficiently to develop good projects for targeting the customers. The consumer demand for the housing would be increased in long run due to sustainable income sources and increasing purchasing power parity.
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