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?