Supply Factors
This affects the price of a house because if there is little supply and the demand stays the same then less people can buy the good and so those people would be willing to pay more for the good and therefore the price would rise.
Crime Rate
This affects the price of a house because less people want to live in an area with a high crime rate as their home is at risk, meaning there is less demand for houses and therefore to clear the market the equilibrium price is pushed down.
So these are the main things that affect the price of a house, but I think that unemployment is the major factor affecting the price of a house.
I will now talk about why I think unemployment is the main thing that affects house prices, I will compare the price of house with the unemployment rate in general and how it they both change together, i.e., as the unemployment rate lowers the house prices higher, and vice-versa.
Unemployment
Unemployment affects the price of a house in three different ways; number one is as unemployment rises there will be more people who will be unable to afford to buy a house. This means that there will be less demand for houses if not as many people can buy one as before. Therefore demand for houses will fall and consequently the equilibrium price for houses will fall in general, whatever the type of house. Also if unemployment is low, then the price of certain types of housing might rise, for example more people will be willing to live in a flat and there will be more demand for flats and the equilibrium price for flats will rise.
Also the third way that unemployment affects house prices is that a area with low unemployment will attract people to it, meaning that people will move to that area, and there will be high demand for these houses and consequently the equilibrium price of house in that area will rise.
One can prove these 3 scenarios with statistics, if you look at the tables on the following pages you will see the house prices in different regions of the United Kingdom and then you can compare them with the unemployment rates in these regions of the United Kingdom. There is another table showing how in general across the country how when the unemployment fell the price of houses went up.
After this on the next few pages, you will see graphs comparing the unemployment rates with the house prices, on the graph you will see more clearly how when the unemployment rate changes then the price of houses changes.
All the data is from the year 1998.
From these statistics one can prove that unemployment is a major factor affecting house prices. Using these graphs we can see how across the country the unemployment affects house prices. The graphs show us that no matter what area you live in your house prices are still affected by the rate of unemployment, which shows how major unemployment is a factor in determining the price of a house.
Now that I have compared across the country , I am now going to compare two identical houses in terms of size of the house and garden etc. but the two houses will be in two different areas in Lodon. I will look at and explore all the things about these houses and especially I will talk about all the things which I said affect house prices including unemployment and then try to explain why I think that the price of the two houses, even though they will are identical in the size, will be very different.
This prove my statistics as well as show how two identical houses get affected in terms of price and then put that back to the big scale and see that each and every house in the United Kingdom is affected by house prices.
First I will describe the two houses I have chosen and tell you about the amenities and services they have and other good things about them, then after I have described both houses I will explain why there is a difference in price.
The two areas I have chosen are Hackney in London.
And Barnes in London.
These are the two houses that I am going to compare, they are both in London and they both have identical size i.e. three bedrooms and one bathroom each.
The first house in hackney costs £279,000 and has good local facilities, as well as being attractive and compatible with pets, and on the other hand the second house in Barnes costs £315,000 and has equally good facilities, amenities and is equally attractive as the one in hackney.
But why is there such a big price difference, this because of the reasons I said affect house prices. Firstly unemployment, the unemployment rate in Hackney is very high and this is one of the main reasons people want to move out as well as one other main reason, crime rate, crime is enormous in Hackney and therefore people are scared and want to move out, therefore they want to get rid of there houses quickly for a lower price even, but also because of these things people are not wanting to live in Hackney pushing the demand for housing down and with it the equilibrium price of the house. The only reason that price of housing in Hackney is not very low is because of the good transport links it has with the centre of London.
On the other hand Barnes has a better unemployment rate than Hackney and has a lower crime rate and also the Location of the housing and transport links to the centre of town are also good.
This shows how unemployment, amenities, crime rate etc. affect the price of a house no matter what area its in. It shows that each and every houseprice in the United Kingdom is affected by these things and therefore these are the main reasons which affect house prices.
Conclusion
I want to make clear that in my investigation If I said houses or house that meant every type of house in the spectrum e.g. flats, terraced, bungalow, unless I specifically mentioned a name e.g. flats. This is because I made my investigation in such a way that I was not singling out any house sand trying to show that all types of housing are affected.
The overall outcome of my whole investigation proves from my research and my statistics which I have stated in my graphs it shows that many things such as crime rate, interest rate and unemployment affect house prices, but as I said at the beginning and after this investigation I am more sure of it now, I think that unemployment is still a major factor affecting house prices.
I have come to this conclusion, because of the amount of houses unemployment affects. OK that interest rates, location of house are major factors too but they don’t affect every house in the country in the same way that unemployment does, unemployment affects each and every house in the United Kingdom, and not only that, but it can affect houses two or three different ways. The other factors don’t affect other types of housing e.g. flats or rented property, but unemployment still does because the same rules apply for these properties as they do for houses when they are affected by unemployment i.e. people want to move to an area with low unemployment either to a flat or a house, either rented or to buy, but demand for both these things go up and consequently the price. But for things like interest rates, only the houses and flats on sale are affected as houses and flats on rent don’t have mortgages and things so interest rates does not affect their rental price.
Bibliography
- Modern Economics (Book)
- Economics For G.C.S.E (Book)
- Economics- An Introduction For Students Of Business And Accounting (Book)
- The Economics Of Urban Areas (Book)
- Urban Economics (Book)
- The Halifax House Price Index (Literature)
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(Internet)
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(Internet)
- T.V
- Newspapers
- Teletext And Fasttext
- Estate Agents
- Family And Friends
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