RENTAL HOUSING MARKET ANALYSIS

Rental Housing Market Analysis

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Rental Housing Market Analysis

(a)

(Fig. 1)

An increase in migration would make the demand curve move towards the right from its equilibrium position. This can be seen through the above diagram where D1 is the original demand curve and P1 and Q1 are the original price and quantity demanded before the increase in migration. The increase in migration would result in more people seeking rental accommodation which would ultimately increase the demand for rental accommodation making the demand curve to shift towards the right from its original position i.e. D2 in the above diagram. This would result in an increase in the quantity demanded for rental accommodation from Q1 to Q2, which would ultimately increase the price of rental accommodation as well, from P1 to P2.

(b)

(Fig. 2)

An increase in the quantity of public housing available would make the supply curve move towards the right from its equilibrium position. This can be seen through the above diagram where S1 is the original supply curve and P1 and Q1 are the original price and quantity supplied before the increase in quantity of public housing. The increase in quantity of public housing would result in more housing availability for rental accommodation which would ultimately increase the supply for rental accommodation making the supply curve to shift towards the right from its original position i.e. S2 in the above diagram. This would result in an increase in the quantity supplied for rental accommodation from Q1 to Q2, which would ultimately decrease the price of rental accommodation as well, from P1 to P2.

(c)

(Fig. 3)

A change in tax legislation to allow deductibility of mortgage interest payments against income for owners and occupiers would make the demand curve move towards the right from its equilibrium position. This can be seen through the above diagram where D1 is the original demand curve and P1 and Q1 are the original price and quantity demanded before the change in tax legislation. This change in tax legislation would result in more people buying housing since they will get tax benefit by deducting mortgage interest payments from their income which would ultimately increase the demand for rental accommodation making the demand curve to shift towards the right from its original position i.e. D2 in the above diagram. This would result in an increase in the quantity demanded for rental accommodation from Q1 to Q2, which would ultimately increase the price of rental accommodation as well, from P1 to P2.

(d)

(Fig. 4)

A government subsidy on housing construction would make the supply curve move towards the right from its equilibrium position. This can be seen through the above diagram where S1 is the original supply curve and P1 and Q1 are the original price and quantity supplied before the subsidy, which would increase the quantity of housing available for rent. The increase in quantity of public housing would result in more housing availability for rental accommodation which would ultimately increase the supply for rental ...