Econ 101: The Complete Intro to Economics

ECON 101 WRITING ASSIGNMENT

Table of contents
Introduction................................................................................................................................3
Housing prices of Canada..........................................................................................................3
Conclusion..................................................................................................................................6
Reference....................................................................................................................................7

Introduction
Housing is one of the most influencing good or commodity of the market. Historical evidence
such as the financial crisis of 2007 has shown the power of the price change in the housing
industry. This paper is going to talk about how the recent estimation regarding the change of
housing price may affect different sectors of the Canadian economy.
Housing prices of Canada
Housing prices in Canada like most part of the world is very instrumental in stabilizing the
national economy. The rise in the hourly wage rate of the workers in Canada has led to an
increase in the average annual income of the customers. With higher income, the preference
for own home has come in into play, shifting the housing demand curve to the right side
(Rathore, 2018). While, according to the principle of economics, under unchanged
circumstances rightward shift in the demand increases the price for the normal good, rising
income elasticity of demand for the house may further increase the price for the housing as
wage increases in the future years.
Figure 1: The rise in the hourly wage rate in Canada
(Source: Easthope, Stone & Cheshire, 2018)
However, red tape interventions from the side of the government have also been seen to keep
a check on the price of the house in Canada. The government in May this year have enacted a
price ceiling in the housing market below the equilibrium price level. Muehlenbachs, Spiller
& Timmins (2015) noted that a price ceiling below the equilibrium price can become a
binding price ceiling leading to an excess demand in the market compared to the supply.