• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12
  13. 13
  14. 14
  15. 15

Factors that influence the Price of Houses.

Extracts from this document...


Contents 1. Introduction Pg 3 2. How houses are affected by demand and supply Pg 4 3. Inflation Pg 8 4. Consumer Confidence Pg 9 5. Affordability Pg 10 6. Interest Rates Pg 11 7. Average Property Prices in the UK Pg 12 8. Size and Type of Properties Pg 13 9. Economic Growth Pg 14 10. Conclusion Pg 15 Introduction The question that is to be investigated in this project is 'What factors determine the price of houses?' I have made a hypothesis from this question that I will later prove or disprove in my investigation. My hypothesis is: House prices are mainly determined by mortgage rates. To collect my information I will use a wide range of resources. These will be: � The Internet, particularly specialised sites dealing in economics (e.g. www.bized.ac.uk,). Also property sites that give information on houses. � I will try to use as much of my class work as possible. I will need to look at my notes on Demand and Supply. Also advice and encouragement will also be gained from parents if needed as they have some experience in the house market. A major resource in this investigation will be looking at the determinants of demand and supply, which will help us when investigating the factors that affect the demand and supply of houses. How House prices are affected by Demand and Supply This is the one of the main factors to be considered in this investigation. This project will be greatly influenced by supply and demand and below the laws of supply and demand will be explained and examined to see how it operates with regard to house prices. * The law of demand states that as the price of a product increases, the demand for that product decreases and as the price decreases, the demand for the product increases. This is an inverse relationship. ...read more.


This is up 0.6 on the same period last year, though the ratio remains well below the record peak of 5 times average earnings. "The UK housing market has been very strong in 2002 but house price growth has gradually eased over the last three months", said Gary Styles, Halifax's chief economist. UK house prices rose by 0.2% in August, compared to steeper monthly rises of 1.8% in July and 2.4% in June. Consumer Confidence The article below explains how UK's consumer confidence is falling and the UK housing market is starting to decline. House price confidence 'slipping' Confidence in the UK housing market is "starting to decline" according to the Woolwich bank. The latest snapshot of the mortgage market by the bank, found confidence had fallen for the second month in a row. But while confidence fell, the Woolwich found that the demand for home loans continued to grow strongly. The latest figures from the UK's fourth biggest lender, showed gross mortgage lending grew by 17% last month to �20bn. However, Mr Gray says that there are signs that confidence amongst home buyers is subsiding: "We have seen a clear indication that people's confidence in the housing market is starting to decline." Last month, saw the first fall in home buyer confidence since November 2001. In July, this trend continued with 59% of those surveyed saying that they felt the market would expand, a fall from 61% in June. However, in the two-areas of the country that have experienced the greatest rise in house prices over the last year - East Anglia and the South West - buyers are still bullish about prices. Nearly three quarters of buyers in the South West and two thirds in East Anglia believe that prices will rise strongly in future. Mr Gray said lower confidence would dampen demand and house price growth would be moderate over the coming months. ...read more.


However, this had no great bearing on house prices immediately as people had low confidence in a seemingly volatile house market. The following table shows about how in recent years the economic growth has affected the house prices. YEAR Boom / Recovery / Recession / Slowdown Effect on demand for houses? 1979 - 1982 Recession Low / decrease 1982 - 1986/7 Recovery / reasonable growth Increasing 1987 - 1990 Boom Rapid increase 1990 - 1992 Recession Very low / decrease 1992 - 1995/6 Recovery Still low (low consumer confidence) Conclusion Through looking at my information above and all of my notes I would be accurate in saying that my hypothesis was wrong. As with all things, demand drives up prices. So, the fewer properties on the market coupled with a growing demand for homes will increase demand and buyers start to outbid each other. Also, every one wants to live in the best districts of our towns and cities - so these will always be in demand, without the demand for a product, the product would not be built. As long as there are people living there will always be a demand for accommodation of some sort. From the project we have learnt many things about today's economy in the UK. It is shown that consumers do not think about the far future and organise their financial duties on a short-term future basis. This is because consumers can lose confidence very easily and as their income is not getting any higher they become scared and save more instead of spending. This project also helps us to understand that properties in the UK are very important investments and there are many factors to take into account when choosing the right home. Recent news stories show that house prices are increasing because of the high demand for these houses. The articles above show that houses are selling at their fastest and the supply of houses has also increased because of this. 09/05/2007 House Prices Project - 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. Retailing In India - A Government Policy Perspective

    Therefore, growth in retailing is vital if the Indian government wants to achieve the 8-10% GDP growth that has long been a dream. Greater Tax Income: Allowing FDI in retail implies a growth in modern formats. Tax collection from modern format stores is much easier from organized retail sector.

  2. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    bid and ask prices or as a percentage spread (equations 1 and 2 respectively below). A narrow spread suggests a greater liquidity because the market price of the bond is more accurately reflected and thus easier to sell in the market.

  1. Case Study: The Home Depot

    The Home Depot's multidivisional organizational structure is collaborative with its current corporate structure. One advantage of the multidivisional structure is the decentralization of decision making. This is widely used in the corporate cultural of The Home Depot. For example, corporate headquarters set individual stores up so that they were very

  2. Causes of the Great Depression

    This is one reason why the Allies had insisted (to the consternation of the perhaps historically vindicated Woodrow Wilson) on demanding reparation payments from Germany and Austria. Reparations, they believed, would provide them with a way to pay off their own debts.

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    It will also build barriers making entrance into the market more difficult. As the companies would have resource-based advantages and strong-hold dominating particular geographical areas due to the fragmentation nature of the industry. This strategy has been adopted by companies such as George Wimpey, Berkeley, and Persimmon who has now

  2. The Japanese Occupation - Concept of Great East Asia Co-Prosperity Sphere

    economic forces, although for the region only Japan remained the link with the outside world which owing to the war situation, had shrunk to the Japanese-controlled territories of Greater East Asia. 2. In exploiting Southeast Asia's resources, Japan applied the same methods as the Western colonial regimes and throughout the

  1. Free essay

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

    [1] [7] House prices in Trafford [4] This shows that the house prices in Trafford are higher than the rest of Greater Manchester. Trafford has seen the biggest annual decrease in house prices but they have increased the most during the last quarter, which may be a better figure to use because they could increase further.

  2. Critically evaluate the perceived competitive starategies of the five clothing retail outlets, namely Edgars, ...

    growth for 2003 while private consumption expenditure is set to grow at 3,4 % in 2003. The latter growth is anticipated against the background of, among others, expected lower personal taxes especially among low and medium income groups, a relatively stable interest and exchange rate environment, structurally lower inflation, macroeconomic stability and lower foreign debt.

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