Factors Affecting Price of Private Housing in the UK

Economics for
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
1. Identify the factors which affect the price of private housing in the UK................................1
TASK 2............................................................................................................................................7
1. Explain economic policies that used to stimulate the demand of private housing..................7
CONCLUSION .......................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business economics is the application of economic theories which is used by the
organizations to analyse factors that contribute for the diversity of business structure. It is
essential to analyse the relationship of firm with product market, capital or labour. Economics for
business helps in focusing economic issues as well as problems related to the organizations,
management and strategy (Berck, 2018). Before formulating any strategy they have to analyse
the factors which impact the demand as well as supply of the commodity. This report cover
various topics such as identify main factors by using demand & supply analysis which impact the
price of private housing in the UK. Along with this, evaluate economic policies that used to
stimulate the demand of private housing.
MAIN BODY
TASK 1
1. Identify the factors which affect the price of private housing in the UK
Law of Demand: It is the economic principle that refers to the desires or needs of
consumers regarding purchasing of goods & services and it also include the willingness to pay
for goods. All the factors are constant rather than price, when price increases then demand of
commodity decreases and vice versa (Law of Demand, 2019). Basically, there is inverse or
negative relationship between price and quantity demanded by consumers. Below mention graph
will provide better understating of law of demand in context of business.
Illustration 1: Demand Curve, 2019.
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(Source: Demand Curve, 2019)
From the above mention graph, P denotes price of goods and Q denotes the quantity
which demanded by the customers. In context of private housing in the UK, when price of
property increases from P2 to P1 then demand automatically reduces from Q2 to Q1 and vice
versa. DD represent the demand curve which shows the impact of price on private housing in the
UK.
Law of Supply: It is also one of the economic theory which help the business corporate
to understand the relationship of price and quantity supplied for a goods. Here, all the factors are
constant rather than price. Basically, when price of product increases then suppliers raise the
production of goods and supply in the market (Law of Supply, 2019). In context of private
housing, when price of building raise then construction company also increase the supply and
vice versa. There is a positive relation between price and quantity demanded by consumers. With
the help of supply cure, learner able to understand the concept of supply in the private housing
sector. Supply curve mention below:
Illustration 2: Supply Curve, 2019.
(Source: Supply Curve, 2019)
From the above diagram it shown that supply curve is in upward sloping because of
positive relation between price and quantity supplied. When price increases from P3 to P2, then
quantity also increases from Q3 to Q2. There is positive relation among the price & quantity and
it will be possible when all the factors are constant rather than price.
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