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An investigation in to the housing market.

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Introduction

An investigation in to the housing market Economics Mr Burgess Anna Hill 12GD Aim: Describe and analyse the changes of housing in the local area over the last 5 years The housing market is one of the most talked about topics in the news. I assume this is due to the high influential potential it holds to the rest of the economy. In this essay I will focus on the causes in house prices. I will investigate how prices have changed nationally and locally. I interviewed an Inter counties estate agent to help my investigation and get his views on the situation. The price of housing fluctuates enormously. Not only does it vary from region to region, but also it is also very volatile within these regions. There are many causes for these unstable prices. According to a spokes person form the Inner county estate agents says there are many factors, which influence the housing market. He believes one of the main factors, which have been influencing the local housing market in the southeast, is the large amount of people coming to work in Cambridge recently. The supply curve appeared to be vertically vertical in the short run. However, the high demand resulted in predictable high prices. ...read more.

Middle

If the savings interest was 3% they not only miss out �3000 interest rates. Instead, they have to pay interest, which means altogether they have �7000 less. (-�4000 mortgage - �3000 loss of interest) This money is found especially difficult to give out by first time homeowners since they already may have to pay tuition fees and are only on very low paid salaries, (usually �200,00.) Therefore if interest rates go down, house prices increases will slow down because people know that's costs are higher so demand for houses decreases. Less demand means lower prices. If people want to buy a new house after 5 years a 4% they will have paid �2000 there for would need to sell their house at a minimum of �220,000 just to cut even with their expenditure. However, this does not take into account the loss of interest on the savings. So this would mean they would need a house price increase by a further �15000 (5 x 3000) interest on the savings. - 235000 for a house, which they had bought for �200000. This is how inflation is fuelled by house price increases. After taking this into account we can now understand why the prices of houses are so high in East Anglia, since interest rates are so low. ...read more.

Conclusion

According to 'The Hometrack' Property Company, house prices in England and Wales fell in May for the second month in a row. The percentage change in prices over the last year in each region can be seen in the chart. In conclusion prices for housing are high in the southeast due to a number of factors: * The demand for housing in an area, * The supply of houses, * Reputation for the area, * General interest rates influence the house-shopping behaviour, * Low interest rates enables people to buy better or bigger houses, * Facilities in the area, * Local employment chances. Region Average Price Quarterly Change Annual Change East Anglia � 137,826 1.3% 18.3% East Midlands � 116,235 1.7% 26.8% Greater London � 218,404 -0.9% 11.5% North � 90,807 8.0% 36.4% North West � 90,697 4.6% 25.8% Northern Ireland � 89,674 16.9% 14.6% Scotland � 77,820 6.7% 17.3% South East � 193,315 -1.0% 14.7% South West � 155,811 1.1% 20.0% Wales � 97,995 4.2% 29.6% West Midlands � 127,130 5.5% 28.6% Yorkshire & Humberside � 88,940 6.8% 33.0% Higher prices are less desirable, and this may mean many families do not have the economic ability to live in the area. The demand refers to the quantity of houses that purchasers are willing and able to buy at a certain price. Houses are scarce in relation to demand. ...read more.

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