Economics - House Prices.

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Economics Coursework- Investigate What Affects The Price Of A House-By Sheryar Majid




There are many things that affect house prices. Some things have a short-term affect such as interest rates and unemployment rate, but others have long term affects such as Location of the house and access to basic amenities.

I will be exploring all the things that affect house prices as well as comparing two areas in Redbridge and comparing the price of houses in these areas along with the cost of living in these areas. I will also look and compare all the following things which I think affect house prices, these things can affect house prices in may ways and sometimes have knock on effects, for example interest rates go both ways, they can increase and decrease the price of houses as I will explain. Then I am going to concentrate on what affect unemployment has on house prices, because I think the major factor affecting house prices is Unemployment. 

The main things that affect the price of a house are:


This affects the price of a house because as unemployment rises then less people will have the money to buy houses and therefore the demand for the house will be lower and the equilibrium price will fall. Also if there is an area with low unemployment then people will be attracted to the area because of the jobs, and there fore demand will rise and so will the equilibrium price.


This affects the price of a house because if you for example take 2 houses in Ilford, both with 3 bedrooms and compare their prices, they can be different. For example house A costs £103,000 and has basic amenities nearby, house B also in Ilford but a little further away costs £133,00 and has a park, train station and local amenities very close to it. Why is there such a big difference in price? Because of house B being in a better location and having much better amenities.


This affects the price of a house because it has the opposite affect of what unemployment does. If more people are earning more money and have more to spend they will want to buy houses therefore the demand for houses would get higher and therefore the equilibrium price for houses would get higher.

Interest Rates

Interest rates are the amount of every £100 that one must pay for the use of another person’s money. If interest rates are high, then this means that building societies and banks will be giving lots of profits for borrowing their customer’s money. This affects the price of a house because as the person gets more money they can in some cases be saving up for houses and therefore this raises the demand of houses and raises the equilibrium price. But on the other hand because banks have higher interest rates on loans than savings, then the person will have to pay more interest on his/her mortgage, meaning people might be discouraged to buy houses because they will have to pay more money and to compensate for this the equilibrium price will fall and therefore meaning people, even though interest rates have risen, price of houses has gone down meaning people will pay the same as they would have before.

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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 ...

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