ECONOMICS ASSIGNMENT

Economics Assignment

Summary

Housing is of great importance for economic development and social well-being of the region, because it produces a kind of goods that, apart from the asset, are indispensable in meeting basic needs within the individual.

For this reason, the analysis of housing is very important from the standpoint of economic and social policies, because it is not only part of the wealth of the family, but the country itself. This paper will analyze the various factors that affect supply and demand when buying a house in London.

Economics Assignment

Introduction

Diverse population leads to a wide range of housing types to be available: houses, apartments, bungalows, maisonettes among several others, with most of its housing market as second hand.

This report will make a detailed analysis of the housing market, focusing on the main factors affecting supply and demand in the process of buying a house and find where the free market fails, and therefore the government to intervene. Discussion The demand for housing:

For each housing transaction is the seller and the buyer. The seller agreed to the price they are willing to take on the property and that they think that property can achieve. The buyer decides that they are willing to pay for the property. However, there are factors that will strongly influence the demand and supply houses. These factors are: demographic Income Housing Interest Rate, Cost Price and availability of credit / Mortgage Consumer preference Price substitutes, Price compliments Supply of housing

In order to generate new housing supply following factors is necessary: Land Labour, Other inputs (electricity, construction materials), the amount of housing produced for sale is determined relative to the cost factors mentioned above. The second sentence of housing is determined by the number of people wanting to sell their properties and the factors described above do not affect this. 3. Demand and suggestions: Whenever the demand of houses to grow faster than the supply house, the price tends to rise. Number of new homes built is low compared with demand growth, this situation is one of the main reasons why housing prices rise. This is the current market situation in the UK, where house prices in Britain fell by more than 10% during 2007 to the end of March quarter 2008 (-10.3% across the country and -12.4%, depending on the Halifax) .

Buyers and Sellers Power

Prices in the region vary for different reasons. When housing demand is higher in some areas than others, and also when there is a shortage of high quality properties, the seller will be responsible for the market, which will establish a balance in the market is biased towards the seller. When this happens, because, probably, will exceed market demand for good properties, and sellers can expect a proposal for the property that they intend to sell to reach or exceed the minimum selling price. In contrast, when the demand for new and old homes is weak and there is over supply of properties available in the ...