With the help of a diagram:
Explain the likely circumstances in which house prices might fall
Analyse the likely impact of this fall on:
First time buyers
Those living in rented accommodation
The rest of the economy
Consider the information contained in the demand and supply schedule for new-build houses, and answer the questions that follow.
|HOUSE PRICES £000||DEMAND (000)||SUPPLY (000)|
What is the current equilibrium price of houses?
What would be the likely effect of the government imposing a maximum price of £200,000?
What is the likely effect on house prices of a fall in interest rates, which increases demand by 10% at each price?