Questions on house prices

Question 1

With the help of a diagram:

1. Explain the likely circumstances in which house prices might fall
2. Analyse the likely impact of this fall on:

Property owners

First time buyers

Those living in rented accommodation

The rest of the economy

Question 2

House prices
Consider the information contained in the demand and supply schedule for new-build houses, and answer the questions that follow.

1. What is the current equilibrium price of houses?
2. What would be the likely effect of the government imposing a maximum price of £200,000?
3. What is the likely effect on house prices of a fall in interest rates, which increases demand by 10% at each price?