Factors Impacting Price of Private Housing

Economics for
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
TASK 1............................................................................................................................................1
1. Identify the factors which impact the price of private housing with the help of Demand &
Supply analysis............................................................................................................................1
TASK 2............................................................................................................................................8
1. Explain main government policy which used to stimulate the demand of private housing in
the UK..........................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics for business is the study as well as struggle which organization have to done
in order to allocate resources as per the requirement of their operations. Business economics is
the segregation of economic theories which help the corporate to implement these theories in
effective manner in order to maximise productivity as well as profitability (Berck, 2018). It helps
in analysing the factors that work against and control that how resources used in effective
manner such as labour, capital material etc. This project report cover various topics such as
analyse the factors which influence the price of private housing in the UK by using demand &
supply analysis. In addition, evaluate some government policy which they used for stimulate the
demand of private housing.
MAIN BODY
TASK 1
1. Identify the factors which impact the price of private housing with the help of Demand &
Supply analysis
In economics, demand & supply play very important role where relationship between
price or quantity of commodity which demanded by customers or produce by the manufacturers
in order to satisfy consumers demand or needs. Economics based on various assumption such as
in context of demand price and quantity have inverse relation. On the other hand, in case of
supply price and produced quantity have positive relation. Both are economic theories which
provide better understating of this concepts and it described below:
Law of Demand: It is refer to the economic policy where all the factors are constant
other than price. When price of commodity increases then demanded quantity decreases which
impact the overall demand of product (Böhme and et.al., 2015). There are inverse or negative
relationship between price or quantity. Change in the price will impact the demand of private
housing in the UK, so in order to increase, constructors have to reduce price of houses.
Relationship of price or housing demand will represent with the help of demand curve which
mention below:
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Illustration 1: Demand of Private Housing, 2019.
(Source: Demand of Private Housing, 2019)
Demand curve is the graphical representation which shows the downward slopping
economic graph. It shows the relationship between price and quantity demanded by consumers
and the price which they are willing to pay. Above mention demand curve where P denote the
price of houses and Q denote the demand of quantity. When price or private housing increases
from £200,000 to £250,000 than it will reduce the quantity from Q to Q1 (Demand of Private
Housing, 2019). Similarity, when price decreases then demand of private housing increases. It
has negative relation and D represent the demand curve which provide the overall
Law of Supply: it is one of the economic theory which shows the relationship between
price and quantity supplied by manufactures as per the demand. All the factors are constant
rather than price. There are positive relationship because when price increase then supplied
quantity also increase. On the other hand, when price decreases then supplied quantity also
reduces (Supply of Private Housing, 2019). Supply curve will provide better understating of law
of supply as well as it relation with price. Below mention graph enhance the knowledge and
make organization capable to understand market trend.
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