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With reference to specific examples, what determines the price of a house?

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Introduction

GCSE Economics Coursework With reference to specific examples, what determines the price of a house? By Tom Nixon 11BD In this economics, I will be explaining what determines the price of a house with reference to: * Demand and supply; * Size, facilities and age of a house; * Local location and the surrounding area, and; * Cities, suburbs and the country Introduction Demand is the willingness and ability to buy a good or service at any given price. At price p, the quantity bought is q. However, if price increases from p to p1, the quantity sold decreases from q to q1. However, if the price falls from p to p1, then the quantity demanded will increase from q to q1 Supply is the willingness and ability to sell a good or service at any given price. At price p, quantity q is sold. If price increases from p to p1 then quantity supplied also increases from q to q1. If price falls though, from p to p1, then the quantity supplied will also decrease from q to q1 as suppliers are more willing to sell products at a higher price. ...read more.

Middle

An example of an area like this would be London. I predict that houses in ideal locations will be more expensive than houses near to undesirable features, for example airports, as there is low demand for houses near to them, therefore we can assume that the price will be relatively low also. Size, Facilities and Age Of A House Below is a table of house prices for different types of houses with different facilities in Caterham. The average price for a dwelling in Caterham is in the region of �235, 000 - �245, 000. Type Of House Price Split level maisonette �122,500 Split level apartment �165,00 3 bedroom terraced �227, 500 3 bedroom semi-detached �250,00 3 bedroom converted townhouse �334,950 5 bedroom detached �499,950 As we can see, as the facilities and the size of the houses increase, so does the price. This is because a five bedroom detached house costs more to build and also it is a luxury to have a very big house therefore if it was very cheap people may question the quality. ...read more.

Conclusion

Thus people will wait a while before buying when the mortgage rates are low. Then they think that they can afford more and buy bigger houses which lead to rising house prices and a spiralling economy. Conclusions From the explanation, I think that the biggest factor in determining the price of a house overall is mortgage rates. If demand is high for housing, then the price should be low, according to the demand curve. However, if mortgage rates are high then demand is low and vice versa. I did not predict that mortgage rates would be the main factor in determining the price of a house but I think that my conclusions have matched my hypothesis to a certain extent because the location of a house will not determine its price if you look at it from the wider picture. However, when you look at house prices in specific areas, then the location becomes a main factor. I believe my evidence and material that I used to be quite reliable. Although my evidence for house prices in Caterham were not averages so anyone of the prices could be an anomaly but the prices reflected what I had previously predicted. ...read more.

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