Market Structure and Monopolistic Competition in the Auckland Housing Market
Added on 2023-04-20
4 Pages826 Words334 Views
Business Economics
Market structure
Market structure is defined as the degree of competition and the nature of pricing policy
which prevailing in the market for goods and services (Businessjargons, 2018a).
Monopolistic competition- Here exist large number of organisations who produces
differentiated products that are substitute to each other (Tutor2u, 2018). In monopolistic,
large number of sellers produce similar but not identical and these products compete with
each other on other several factors other than price. With such an intense competition with
differentiated products, new firms can enter the market with unique features can outstand it in
the market (Tutor2u, 2018).
In 2002, there were many vacant houses and it was inexpensive. Recently, it is seen that
prices of the houses are skyrocketed due to increasing demand. With the growth of
population, low interest rates have boomed the Auckland housing market. Auckland is
recognised as the largest real estate agency but government has been imposing tax deduction
on foreign buyers and has introduced the concept of capital gain tax. Auckland population
rose by 17% that imply$240000 increase in prices. Interest rate declined for mortgage from
8.5% in 2008 to 5% by the end of 2016 (Reddit, 2019). The housing market was shortly
supplied for houses because Auckland is exposed to earthquake risks whereas the trend for
personal dwelling has been increasing. The prices of New Zealand house prices are going up.
The bullish 2019 market exists because of low interest rates that stay for two years, recent
immigration increases the demand of housing facilities, low unemployment that provides job
security, and the market is more stable (Reddit, 2019). After the housing crisis, it was at risk
of interested by several people interests to resolve two important question such as housing
affordability problem and availability of housing. Due to these crises, property prices are out
of control and property wealth accumulates in few hands. Until, the government has to
Market structure is defined as the degree of competition and the nature of pricing policy
which prevailing in the market for goods and services (Businessjargons, 2018a).
Monopolistic competition- Here exist large number of organisations who produces
differentiated products that are substitute to each other (Tutor2u, 2018). In monopolistic,
large number of sellers produce similar but not identical and these products compete with
each other on other several factors other than price. With such an intense competition with
differentiated products, new firms can enter the market with unique features can outstand it in
the market (Tutor2u, 2018).
In 2002, there were many vacant houses and it was inexpensive. Recently, it is seen that
prices of the houses are skyrocketed due to increasing demand. With the growth of
population, low interest rates have boomed the Auckland housing market. Auckland is
recognised as the largest real estate agency but government has been imposing tax deduction
on foreign buyers and has introduced the concept of capital gain tax. Auckland population
rose by 17% that imply$240000 increase in prices. Interest rate declined for mortgage from
8.5% in 2008 to 5% by the end of 2016 (Reddit, 2019). The housing market was shortly
supplied for houses because Auckland is exposed to earthquake risks whereas the trend for
personal dwelling has been increasing. The prices of New Zealand house prices are going up.
The bullish 2019 market exists because of low interest rates that stay for two years, recent
immigration increases the demand of housing facilities, low unemployment that provides job
security, and the market is more stable (Reddit, 2019). After the housing crisis, it was at risk
of interested by several people interests to resolve two important question such as housing
affordability problem and availability of housing. Due to these crises, property prices are out
of control and property wealth accumulates in few hands. Until, the government has to
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