As the number of repossessions increase in the mortgage institutions, the level of returns that the mortgage institutions and other housing institutions will derive from the housing sector are likely to go down given that they will be forced to make provisions for large losses as a result of debts which are uncollected (Muellbauer and Murphy 1997, p1701-1727). This will greatly affect the profitability of the housing sector. When that happens, the lending procedures in financing housing investments will be stricter and also a high interest rate will be charged in return.
Finally the other expected effect is that the housing market is likely to experience the loss of the city bonuses, especially if the credit crunch worsens in the coming periods. These bonuses have been providing assistance to most housing investors in the city of London (Council of Europe 2009, p96). The empirical framework of this research study is based on the analysis of economic performance data, of the housing sector in the United Kingdom.
The variables that will be taken into consideration under this analysis will be; the housing price index and the mortgage interest rate as well as the consumer price index, among others like the employment index. The information about these variables shall be obtained from the government bureau of economic statistics (Council of Europe 2009, p96). This section of the research study covers the research techniques, which will be used to carry out the research study. A case study survey will be used to carry out investigation on the effects of the credit crunch on the housing sector.
A case study analysis will be based on the analysis of the housing organisations in the city of London, which are linked to homeless link in the United Kingdom. Survey Questionnaires will be administered to collect the required information from the targeted sample size (Laurel 2003, p5-220). The research methodology that will be used to gather information on the effects of the credit crunch in the economy, more so to the housing sector will be by use of a questionnaire survey, which shall contain both structured and unstructured questions.
The choice of the questionnaire was arrived at considering the fact that it is easy to administer it, as it will give the respondents an allowance to make a choice of time when they would like to respond to the questions contained in it. On the other hand, the questionnaire will be structured in such a way that it will contain all the important questions, that will provide the information that is intended to achieve the above stated research objectives. Thus the chances of the researcher failing to cover the important points are minimal.
The questionnaire method is also efficient in maintaining confidentiality of the respondents, as they will not be required to record their personal identification details, and in that will they will be at ease to answer the questions contained in the questionnaires(Laurel 2003, p5-220). The questionnaires will be sent by electronic mail to the senior management persons like the chief executive officers, and other top managers of housing organisations of homeless link within the city of London. This technique is chosen because it will reduce the travelling costs, which the research is likely to incur while carrying out the research activities.