Factors Affecting Private Housing Demand and Supply in the UK

Economics for
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
1. Identifying the factors which impact price of private housing with the help of Demand &
Supply analysis............................................................................................................................1
TASK 2............................................................................................................................................6
1. Evaluate government policy which formulated to stimulate the demand for private housing
in the UK......................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Economics for business is the application of economic theories which help the
organization to understand the market situational and economic condition. There are various
factors which affect the business operations and make sure to analyse these factors at the time of
decision making process. Some of the factors contributed in the organization and provide
diversity in the economic structure (Cleff, 2014). Economic theory based on the demand as well
as supply of commodity and there are various factors which impact the relationship between
capital, labour or product market. This report cover various topics such as factors which impact
the private housing of UK, demand & supply analysis and the factors which influence the
demand of private housing in the UK. In addition, there are various economic policies which
required to implement in order to boost the demand of private housing in the UK.
MAIN BODY
TASK 1
1. Identifying the factors which impact price of private housing with the help of Demand &
Supply analysis
Economics used in the organization to analyse the factors which affect the demand as
well as supply of any product or services. Every organization has desire to maximise the
productivity or profitability through minimising the cost of product because it further increase
the demand due to low selling price of product. Most of the organizations enable to determine
the costs which involved in the production period. In context of private housing, construction
organization have to develop their strategy with the help of demand and supply (Evans and et.al.,
2017). It required huge analyse of market and the factors which affect the demand and supply of
housing in the UK.
Law of Demand: This economic theory refer to the concept where other factors are
constant rather than price and quantity. They have inverse relation which is known as law of
demand. When price of commodity increases the demanded quantity of product reduces and
similarity, when price decreases demanded quantity increases (Law of Demand, 2019). It will be
happened due to inverse relationship between price and quantity. In order to understand the
private housing demand, organizations have to understand the law of demand and analyse it, in
effective manner.
1

Demand cure is the graphical representation which helps in providing better
understanding of price and quantity relationship which affect the overall demand. With the help
of demand curve, readers also get the better understanding which mention below:
Illustration 1: Demand Curve, 2019.
(Source: Demand Curve, 2019)
Above mention graph represent that Q is for quantity and P is the price of private housing
in the UK. When price of private housing increases from £200,000 to £250,000 than demanded
quantity reduces Q to Q1. On the other hand, when price of private housing reduces than it will
increases the demand of individual. When individual income increases than it will increase the
will power of an individual to buy more. When income reduces than it will reduce the
willingness to purchase something and they prefer to select alternatives such as renting building.
Law of Supply: It is the microeconomic law where all the factors are constant rather than
price and supply quantity. They have positive relation which affect the supply as well as demand
of individual. When price of commodity increases then supply quantity also increases due to
high demand. On the other hand, when price reduces, than quantity of supply also reduces. In the
short run all the factors are constant but in long run all the factors affect the demand and supply
of quantity (Law of Supply, 2019). This relation will be represented with the help of supply curve
which provide better understanding.
2