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

Explaining how two areas of the housing market works, these being regional price difference and price changes over time.

Extracts from this document...

Introduction

This essay is concerned with explaining how two areas of the housing market works, these being regional price difference and price changes over time. Regional Price Differences Price is dictated by location, type of property and market trends. These factors can be seperated again and explained further. In the year 2001 the average house prices for London and the North are as so: London average: �147,704 North average: �53,951 The causes of this trend are relatively simple; London is currently a more desirable place to live than the North. The quality of local amenities is better in the South than they are in the North. Schools that achieve good exam results, can contribute to a several thousand pound rise in the value of a house if it is in the local encatchment areas. Also things such as libraries, swimming pools can contribute to a more desirable area, along with a low crime rate will make people view the area as being more desirable, and so the demand is higher causing the price of housing to rise. Transport infrastructures in the area of the house can have an effect on its value. After the electrification of the North Eastern railway line the house prices around the York and Peterborough mainline railway stations went up. ...read more.

Middle

This is to say that certain features in certain areas will make the value of the property increase. This is also true of extra bedrooms, loft conversions to make extra rooms add to the value of the house, however dividing rooms up which creates more rooms in the same floor space however does not add to the value of the house. Land availability is also a crucial point in deciding the value of a house. In Greater London there is no more land available to build on, and many preservation orders on existing buildings, this means that very few modern buildings can be build, and only when an existing building is demolished. This leads to artificially high prices in London due to the lack of land, whereas a new house in an housing estate built in a Greenfield area such as Ingelby Barwick near Stockton houses are much cheaper as there is a lot of available land to build on. In the above paragraphs I have outlined the theories behind why location of a house effects the value, and how the type of house in the same area effects the value of a house. ...read more.

Conclusion

This has happened recently, as interest rates have hit an all time low under the guidance of the Bank of England thus meaning mortgages have become more affordable and so more people have been buying houses and so the value of houses have increased. 'Unemployment levels' is the final factor in explaining why house prices fluctuate once adjusted for inflation. During times of high unemployment people have less money in general and so less people can afford to buy houses, therefore the demand is lower and the value of houses drops below the rate of inflation. The above factors: Unemployment, Interest Rates, Government Policy and Economic Growth all effect the housing market and cause house prices to fall or exceed the rate of inflation. Government Policies can cause a lack of consumer confidence, leading to a downturn industry leading to job losses and market values of houses falling below inflation. The opposite can also happen and boom can happen with house costs rising above the rate of inflation. The market follows a cyclical pattern, with times boom causing houses to rise above the rate of inflation before a period of recession the stabilisation before the whole process repeats itself. House Prices Adam Craig 08/05/07 I ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Macroeconomics 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 University Degree Macroeconomics essays

  1. Can Economist Predict House Price Movements

    'The nonparametric part of our model allows sufficient flexibility to find substantial spatial variation in house values. The parameters of the kriging model provide further insights into spatial patterns. Out-of-sample mean squared error and related statistics validate the proposed methods and justify their use for spatial prediction of house values.'

  2. Discuss the bread industry in Malaysia - growth, revenue and pricing.

    For example, bread been consumed by most of teenagers and adult. So Bread Company like Gardenia, expand their product line, introduced Delicia , Toastem, Squiggles, Quick Bites, and Twiggies to target different age group. So when increase target market means increase the number of buyers, therefore demand increases as well, eventually increases revenue.

  1. Explain the concept of Price Elasticity of Demand and discuss its relevance for Business ...

    This is because as discussed, the price elasticity in such conditions will be mainly price elastic and the slightest change in price will affect sales volume by a greater amount. The business must be fully aware of the factors that affect the price elasticity of demand, as it will influence the yield of the organization.

  2. Welfare Economics. In this essay I will be examine the arguments for and ...

    The slope of the isoquant curve measures the Marginal rate of technical substitution (MRTS). The MRTS shows how much one factor of production must be increased by in order to compensate for a decrease in another factor so that total output is the same.

  1. The Global Economic Crisis. The present project analyses different approaches of the crisis ...

    by the "great recession", with customers and sales dropping consistently and ending the way towards tangible economic growth, Groupon has managed to create the proper service at the right time: no new patents or technologies, no inauguration of manufacturing plants, any merger or huge profits.

  2. Communication Sector in Pakistan

    This is an exemplary growth in relation to the population of any country in Asian region. Total mobile subscribers at the end of April 2007 crossed the 58.6 million mark (Fig-14.3). Fig-14.3: Cellular Mobile Subscribers The entry of Warid and Telenor in 2005 resulted in significant changes in the market;

  1. The purpose of this coursework is to study the characteristics of inflation in the ...

    markets - open market operations (placing Eurobonds of the Russian Federation); - Expansion of the exchange rate band (flexible exchange rate); - Termination of exports of gasoline in May and June in order to stabilize the situation in the domestic market.

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