• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economic Theory Driving the Current House Price Fluctuations in Hull

Extracts from this document...


Economic Theory Driving the Current House Price Fluctuations in Hull By N.Whiteley The author conducted an investigation on the fluctuating house prices of Hull from the period 2000 - 03. Summary The report highlights why house prices in Hull have fluctuated during this period, the principal areas being economic business cycles, microeconomics, inelasticity of the housing market, mortgage and interest rates, inflation and the 'buy-to-let' phenomenon. Introduction It was identified that demand for housing is affected by economics, aspirations, and demographic changes in addition, consumer choices, such as cost, location, proximity to local amenities, employment, schools, size and type. The economy tends to move in a series of ups and downs, these vicissitudes are known as business cycles. Of course, markets are complex things and the housing market is one of the most complex. One major inelasticity is that individual people do not simply want a home somewhere in England; they want one at or near a specific location such as their work, or their family. ...read more.


However, it is hard to see what impact new builds have had in stabilising escalating prices, Kate Baker reports; "New supply nationally only accounts for 1% of the housing stock, and so even measures which change new supply significantly would not have much effect on prices were it not for the role of expectations." The Effect of Interest Rates One of the key determinants of demand for houses is the low interest rate because most people finance the buying of a house by borrowing money. Because interest payments are so large a part of mortgage payments, variations in interest rates exert a substantial effect for the demand for housing. Of course, the interest rate is not the only determinant of demand for houses. Another important factor will be the level of income that people have. The faster the level of income people earn is growing the more money they have to invest in their houses. Given theses changes individuals now have more income available to spend on housing. ...read more.


Investors making speculative investments in towns are creating high prices. Conclusion Hull's housing in many respects is in decline; however, evidence from this report suggests that the fluctuations in prices have been created by consumer demand. The demand has been fuelled by low interest rates, low inflation and the buy-to-let phenomenon. Supporting evidence from the Baker Review suggests that new builds have little impact in stabilising prices, which is clearly demonstrated in Hull. High property prices make homeowners feel richer and encourages equity-withdrawal, with many people speculating in the property market which in-turn fuels the property boom. Appendix All Existing Housing Stock Period Year Index % Change Standard Price Q1 2000 248.7 3.3 57,415 Q2 2000 239.9 -3.5 55,960 Q3 2000 242.6 1.1 56,020 Q4 2000 242.4 -0.1 55,975 Q1 2001 241.4 -0.4 55,742 Q2 2001 251.1 4 57,989 Q3 2001 260.5 3.7 60,155 Q4 2001 270.3 3.7 62,408 Q1 2002 280.7 3.9 64,814 Q2 2002 289.6 3.2 66,871 Q3 2002 308.9 6.7 71,330 Q4 2002 339.8 10 78,459 Q1 2003 359.4 5.8 82,997 Q2 2003 384.9 7.1 88,873 Q3 2003 409.7 6.5 94,613 Q4 2003 426.2 4 98,419 N.Whiteley 0300900 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Case Study: The Home Depot

    Furthermore, some conditions that were necessary to stimulate the growth of the industry will be given. Brief overview of the home improvement industry in the US. The home improvement industry is primarily focused on the selling of merchandise for personal and household consumption.

  2. Is residential property in the UK a good investment?

    which in turn will push up the prices of housing in the U.K. However there comes a point when one must stand back and simply say that prices have risen by too much and that you will not pay such a high price.

  1. A Report on US Japanese Economic Crisis - 2001.

    The countries of this regions including Japan is very much dependent on US economy for their exports. There fore the importance of the economic recovery of the USA for economic restoration of Japan and avoidance of an economic crisis in the rest of Asia-Pacific region cannot be over emphasized.

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    that particular product or market and then less money placed in that country. Also big firms have more capital to base plants anywhere in the world but small firms can't. It helps big firms because if there is a decline in one country's economy e.g.

  1. Free essay

    Do high house prices in Trafford deter key public sector workers from seeking a ...

    Trafford Trafford is a 'metropolitan borough' in the south west of Greater Manchester. A 2007 estimate of the population of Trafford is at 212,800. [1] Its area is 40.9 square miles (106.04 km2). [1] There are 73 primary schools in Trafford, 17 secondary and grammar schools, and 6 special schools.

  2. Free essay

    The Economic Impact of the London 2012 Olympics

    h?w thi? ?p?nding tr?n?l?t?? int? inc?m? ?nd ?mpl?ym?nt. In th? p??t, input-?utput m?d?l? h?v? b??n th? prim?ry m??n? ?f tr?n?l?ting ?p?nding ?ff?ct? int? inc?m? ?nd ?mpl?ym?nt ?ff?ct?. ? numb?r ?f ?I?? h?v? b??n c?nduct?d ?f ?lympic G?m?? u?ing th??? m?d?l?. Input-?utput t?bl?? ?r? ?t th? c?r? ?f input-?utput m?d?l?.

  1. Transaction Cost Theory

    This is among the questions asked by Williamson (1985), whose "many significant insights" have given "substance to Coase's suggestion that firms reduce transaction costs" (Alchian and Woodward, 1988, p.65). Williamson focuses on bounded rationality and opportunism, and asset specificity, in his study of economic organisation.

  2. When running a driving school, around 70% of the customers will be young adults ...

    The local areas in which Adrian provides his service are expanding. New homes are being built, this means more shops will be needed to supply everyone's needs. The houses being built are all in excess of �100k plus. This means Daventry is attracting wealthy families.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work