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Effect of New Construction in City Centre Residential Accomodation

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Introduction

The housing market differs from most other market in that the current stocks available dominate over the flow or supply of new buildings produced. Therefore should any changes occur to demand then the increase in supply to bring equilibrium back would take some time. Due to this factor the prices are dedicated more so by the supply of housing that comes on to the market place. Figure 1 Above show how an increase in number of properties sold per month can lead to a reduction in the value of each property, as there is excess supply in the market. However with properties there are outside factor which can influence prices, some of this are * Development works which improve the environment in the city center and encourages people to move to specific locations. ...read more.

Middle

This will provide a quicker solution than new build, but once again is subject to the planners, one way the government can manage the housing sector with out be a provider. As construction projects can be slow to come to the market place then any current developments are subject to a time lag. This time lag means developers can look at what is lacking in the market today and provide to suit any shortfalls. As there has been a large increase in one sub-group of residential then this has caused an under supply, and a rise in price (see fig 1) Governments should be involved in property management as residential is a sub group of the property market, due to many factors this market is considered inefficient. ...read more.

Conclusion

A good example of this is how the government has recently moved some of its main departments out of the south east region. This has affected Exeter as it was chosen for the new Met Office; this has had an effect on the local residential market as cash rich people have moved out of London. This has created an extra demand on the market causing local house prices to rise, and pricing some of the local people of the market place. A similar thing would happen given the example in the assignment of a sudden increase in demand for one type of property. As we are dealing with city center location then this has an additional affect which can be summed up by using Von- Th�nen theory. As this is a central piece of land then this attracts a premium when compared to any of the outer zone. ...read more.

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