Factors Affecting Price of Private Housing in the UK

Economics for
Business
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
1. Identify factors which determine the price of private housing with the help of Demand &
Supply analysis............................................................................................................................3
TASK 2..........................................................................................................................................10
1. Explain government/ economic policies that used to stimulate the demand for private
housing in the UK......................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Supply and demand analysis help the organization to understand the market trend
regrading private housing. In the UK, price of private housing affected due to various factors
which further discussed in this report. With the help of this analysis, construction company able
to identify the factors which affect the consumers demand. So they have top formulate strategy
accordingly. Along with this, supply of new houses also affected because of various restriction
on construction (Böhme and et.al., 2015). This report cover various topics like analysis of supply
& demand and it is used to identify factors which impact private housing price in the UK. Along
with this, it includes economic policies that used to stimulate demand for private housing in the
UK. Main aim of this project report is to identify that how price of private housing affect the
demand of consumer and what strategy made by the government in order to boost the demand in
UK.
MAIN BODY
TASK 1
1. Identify factors which determine the price of private housing with the help of Demand &
Supply analysis
Law of Demand: Under this law, demand of product increases when price of commodity
decreases and it will be possible when other than price all the factors are constant. Price and
quantity have negative relation (Law of Demand, 2019). It is applicable in short run, because in
long run all the factor affects the demand such as household income, substitute price, preference
& taste of customers etc. Below mention graph will provide better understand which help the
individual or business to know about law of demand:
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Illustration 1: Demand Curve, 2019.
With the help of above diagram, it clearly represent the inverse relation between price or
quantity which demanded by the customers. Price is denoted with P and Q is for Quantity, so
when price increase from P2 to P1 then quantity will decreases as well from Q2 to Q1. It will
show the negative relation between the price and quantity.
Law of Supply: It is an economic theory which shows the relationship between price and
quantity produce by the company according to the demand of commodity. There are positive
relation between price and quantity. When price increases then supply of goods also increases
because of high demand (Law of Supply, 2019). It will happen when all the factors are constant
excluding price but in long run all factors affect the supply.
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