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Supply and Demand in Housing in Britain.

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Supply and Demand in Housing in Britain. House prices in Britain have clearly been increasing over time, however, this rise has not been continual and there have been some fluctuations. Fluctuations in this case are changes in price, from the graph we can see that house prices have not fallen between 1973 and 1988, and that there has been a steady rise over these years. But from 1989 through till 1996 the house prices are falling. This fall in price is called negative equity. Negative equity can result from a decline in the value of an asset after it is purchased; in this case the value of a house. This can be a problem for the owners of the houses. If somebody were to buy a house in 1988, they would not be able to sell it at the price they bought it for until mid 1998. ...read more.


* Income - If peoples' incomes were to rise then they would have more money, making them more willing to buy a new house. This would bring demand up, along with the price of housing. If incomes fall then people will not have the money to move to a more expensive house, making demand and the price for houses to go down. * Price of Substitutes - Substitutes are alternatives to buying houses, for example rented accommodation. If the cost of renting accommodation went down then the demand for it would rise. This would cause a fall in demand for buying houses. If the price of substitutes went up, then the demand for housing would rise; as people would be more inclined to buy a house rather than rent it. At the moment it seems that the price of rented accommodation is going down, while the price of housing is clearly going up. ...read more.


If it is more expensive to build flats then more houses will be built than flats, so this will cause supply of housing to go up. * Other Uses of the Land - If there is more profit and better causes in using land for other purposes, for example, farming then the supply of housing will go down. There is a limited amount of land in the UK and this must not only be used for housing. Large amounts of land are used in the UK for farming, and this uses up potential areas for housing developments. * How Easy It is To Build Houses - If people demand larger houses then it will be more difficult to give the public what it wants. If houses are bigger then there will be less time to build smaller houses. This will affect the demand for labour, as more builders will be needed. With few builders supply will go down, as enough houses cannot be built. ...read more.

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