Factors Affecting Rental Housing Prices in the UK

ECONOMICS FOR BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Identifying the factors to determine prices of the rental housing using demand and supply in
the UK. ........................................................................................................................................1
Task 2...............................................................................................................................................5
Governmental and economic policies that can influence the demand of private rental housing
in UK............................................................................................................................................5
CONCLUSIONS .............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Economics refers to study related to production, distribution as well consumption. It
consists of two parts mainly that are macro and microeconomics. Macroeconomics deal with the
whole on aggregate basis where microeconomics deals with smaller context on individual basis.
Supply and demand are interrelated with each other and is concerned with the study of
interactions between the buyers and sellers for determining prices and quantities of goods. Study
is related with the study of rental housing in UK. It is concerned with the demand and supply of
private rental housing in UK. This is also concerned with the policies adopted by government for
promoting the private rental housing in UK.
TASK 1
Identifying the factors to determine prices of the rental housing using demand and supply in the
UK.
Fundamental problem with the rental housing market of UK is the persistent shortage of
houses to rent. Quantity of households in private rental sector have increases in UK fro 2.8
millions in 2007 to 4.5 millions till 2017, that is increase of 63% (1.7 million) in ten years.
Young households more likely are giving their properties on private rent as compared with the
older houses. Properties with the age group of 25- 34 years have the largest group. In private
renting sector households are becoming older in between 2007-2017, proportions of households
reference the people ageing 45-54 have raised from 11 % to 16%.
In economics efficient allocations of resources require that prices in long run are
determined balance between demand and supply. The same rule applies in the housing market
also, where supply of the houses determine the rental prices and demand for houses determine
prices. In private rental housing market prices are determined considering factors that influence
housing stock, availability of houses for rent and cost of building homes (Okoro and et.al., 2017).
Demand for the housing are determined by the needs raised due to demographic developments,
ability of paying and desire of purchasing new house. Prices of rentals similar to binds and
stocks also depend highly over law of demands and supplies.
Demand
Demand demonstrates that people will not be having no or lower demand for goods
having higher prices. This happens when the factors related to this are equal. Consumers tends to
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sacrifice something which comes at higher cost and curbs demand. Likewise low price drive
demand as consumers purchases things when they are relatively cheaper.
Market demand for private rental housing has been presented in below figure. This is
known as market demand curve as it reflects choices of households in economy. In
macroeconomics markets are taken on aggregate basis rather than individual basis.
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