Demand And Supply (Housing) Flashcards
(8 cards)
1
Q
What can a fall in house prices lead to?
A
Negative equity
2
Q
What is negative equity?
A
Value of mortgage is greater than property market vaule
3
Q
Why is negative equity bad?
A
Can’t move house
Reduced spending
4
Q
What is the supply of new build houses dependent on?
A
Costs of building
Number and size of buildings firms
Government policies
5
Q
What are demand factors of housing?
A
State of the economy
Economic growth
Substitutes - eg renting
6
Q
What is the PED of housing?
A
Inelastic. A increase in price leads to a smaller decrease in demand
6
Q
Why is PES inelastic
A
Supply can’t be increased fast.
7
Q
What can house prices lead to?
A
More construction jobs
Increased consumer confidence
Increased spending
