Free Essay: Factors Affecting Demand and Supply for Housing
Housing is a very important need in every modern economy. People require houses for residential or business purposes. In the real estate business, the supply and demand for housing is always fluctuating. There are a number of factors that are attributed to the rise and fall of the supply and demand for housing. These factors affect the supply and demand for housing in any region of the world.
The economic growth in a given region will affect the supply and demand of housing. When there is an increase in the number of people that can afford housing in a given region, we can say that there is an increase in the demand for housing. On the contrary, when the economic growth of a given region remains stagnant it affects affordability and therefore there will be a lower demand for housing.
An increase in the economic growth also means that more people are able to build houses. Therefore there will be an increase in the supply of housing. As people move from one socioeconomic cadre to another, they will prefer better housing. Therefore, the economic growth in a given region greatly affects the supply and demand for housing in the region.
Speculation concerning the future of the real estate business in a given region will affect the supply and demand for housing. When economists predict an increase in the value of property in the future, the demand for housing in the region will go up. On the other hand, when the real estate experts predict that the housing sector will not be doing so well in the future, there will be a decline in the demand. This prediction will increase supply for housing as owners will be selling out. If the prices of houses are expected to go up in the future the demand for housing will go up as many developers will want to amass enough houses to revamp and sell off when the prices are good.
Interest rates play a major role in determining the demand and supply for housing. When the interest rates go up, more people will shy away from getting mortgages. Most people acquire houses through mortgages. Therefore an increase in the interest rates will cause a decline in the demand for housing. People will wait until the interest rates to go down before they acquire houses. However, sometimes it is hard to tell whether interest rates will go up in the near or distant future and so interested homeowners go ahead and purchase houses regardless.
The profitability of building new houses will determine whether there will be an increase or decline in the supply of housing. If developers foresee meager financial benefit from building houses, they will opt not to build more houses. Consequently there will be fewer houses in the market. However, if the housing business promises to be profitable, developers will erect more buildings causing an increase in the supply of houses.
For more of such high quality sample essays, contact www.customwritingservice.org. Our writers come up with the best sample essays for any field of study. Place your order right away!