Effects On Determinants On Supply And Demand In The Housing Market

Introduction

The housing market, specifically domestic housing is seen to be large and very fragmented around Britain. The housing market is similar to any other markets which concludes with the buyers agreeing with the sellers on a certain price for the property. For the housing market the supply will always stay inelastic as prices are always changing. There are a number of different variables which can effect the demand and supply of the housing market such as the buyers ideal location of a home, somewhere which is suitable for raising a family or practicality reasons such as work. Most households need homes, which gives us an indication of how much households are willing to pay looking at their income and by the accessibility of credit.

Effects on determinants on Supply and Demand in the housing market

These issues that have appeared can effect the major determinants of supply and demand in the domestic housing market and can cause a significant amount of change in the market. There are many different factors why supply can be effected such as government intervention, planning permission and general rules and regulations to the housing industry. Housing can either be sold from seller to buyer, or a number of newly built houses by specialist housing development companies or even houses that have been completely redesigned for sale. But the above factors can intervene on buyers decision making. This can also lead to change in demand such as substitutes instead of domestic housing such as flats, apartments or even renting out a house. There are many different elements part of the housing market such as bungalows, flats, apartments and mobile homes. But part of those element are the types of, for example, houses you can buy such as semi-detached or detached. All these fundamentals are carefully examined by buyers, so investing in to a home can be seen as a lengthy procedure. Processes such as mortgages can be seen as long winded and time consuming for first time or regular buyers. Another factor which could effect both determinants is that house owners would rather choose to refurbish or have extensions, which also involves the process of gaining the correct planning permission. This process is known as a barrier to entry, where property developers will need to follow strict rules and regulations to access particular grounds and land.

This table represents all types of properties over Britain with different variation of prices and how prices are effected in each area. The Greater London and the South East regions show an average of over Ј200,000 compared to Northern Ireland and Scotland ranging from Ј123,000 and under on average. This is essential to housing buyers on which can effect their decision making because of these high average prices. This can lead to a downfall in demand in many places such as Greater London and the South East as prices seem to be on the rise in many places. But for the South East, there is a much higher average of sales compared to areas such as the North and the North West which have a much lower average price but seem to have a lower sales than the South