The market demand curve will be the sum of all individual demand curves. It shows the quantity of a good consumers plan to buy at different prices. This will occur if there is a shift in the conditions of demand. Diagram to show shift in demand A shift to the right in the demand curve can occur for a number of reasons:
Friday, June 14, UK Housing Market The housing market is said to be one of the most popular topics of conversation at dinner parties.
In the UK, this is for good reason. Houses are by far the biggest form of household wealth and have a big impact on consumers and the economy. This graph shows two main features of the UK housing market. House prices are volatile with frequent booms and busts.
Despite volatility, and even adjusted for inflation - UK house prices have been on a strong upward trend since the s. Main factors affecting house prices Supply. UK house prices have stayed relatively high despite recession and credit crunch because of a shortage of supply.
Ireland and Spain have seen much bigger house price falls because they have large excess supply. The UK housing market is sensitive to changes in interest rates. Higher interest rates in the early s made mortgages unaffordable and caused a big drop in house prices. A recession and rising unemployment usually causes lower demand for buying houses and a fall in price.
In the boom years ofbanks were keen to lend and they relaxed their lending criteria, enabling more people to get a mortgage. But, the credit crunch meant banks had to tighten their lending criteria making mortgages difficult to get even though interest rates were low see more at: UK house prices have been highly volatile in the past few decades.
On the one hand this is unexpected. But, in practise, house prices are volatile for a number of reasons. This pushes prices up. Change in credit conditions. Mortgage availability can vary depending on the state of the banks and financial markets.
Interest rates are used to control inflation, but a rise in interest rates has a big effect on demand and affordability. In the boom years, we see landlords buying to let and demand rises.
Why are UK house prices so expensive?
Despite the credit crunch, UK houses are still less affordable in than at the end of the Lawson boom in the s. If we look at the affordability of mortgage payments, buying a house looks more affordable because interest rates are much lower in the s, than in the s.
But, with house prices nearly 7 times average earnings in London, buying a house is out of the question for many first time buyers.
Generally, mortgage companies only lend incomes. It is too difficult to raise a deposit. Why are house prices so expensive? Demand rising faster than supply. The UK fails to build enough houses to meet growing demand. This is related to strict planning legislation and the frequent local opposition to building new houses.
Home building was also hard hit by the credit crunch.FACTORS AFFECTING STANDARD OF LIVING DIFFERENCE IN COST OF LIVING A higher National Income figure is required to maintain a high cost of living.
For the past three decades after , China's rapid economic growth has been incredible. Along with many contributing factors to the growth of China is Foreign Direct Investment (FDI), which plays an increasingly significant but rather positive effect on its economic growth.
The Determinants Of House Prices Economics Essay House prices are determined by demand and supply. If demand rises shift to the right or if supply falls (shifts to the left), the equilibrium price of houses will rise. Global economy has been changing significantly in past several decades which has been affected by the goods and services in the national borders leading to the movement of the country up and down in the international system economically.
The relationship of supply and demand affects the housing market and the price of a house. The law of supply and demand states when there is high demand for a good or service, the price of the.
An explanation of factors affecting demand - including movement along and shift in demand curve. Factors include: Price, income, substitutes, quality, season, advertising. It shows the quantity of a good consumers plan to buy at different prices.
1. Change in price.