Factors Influencing Price of Rental Housing

Economics For Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Supply and demand analysis for identification of factors that influence price of private rental
housing...................................................................................................................................1
TASK 2............................................................................................................................................5
Governmental or economic policies used to influence demand for private rental housing in
UK..........................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Economics for business mainly covers the issues that are facing by present business,
where it helps in examining all factors including financial crises to operations, that affect a
particular industry. The housing market is considered as perfect example to understand economic
theory, which helps in analysing the way supply and demand fluctuate business. Investigating on
this topic, in present report, will lead to evaluate how prices of house, especially private rental
housing is heavily depending on law of demand and supply. The main purpose for investigation
is to explain number of determinants regarding with rental values of commercial property, in
order to highly rental volatility and reason behind same. Furthermore, economic or governmental
policies that may use for influencing demand for the same in UK, is also demonstrated, with
recommendations to stimulate demand of rental housing.
TASK 1
Supply and demand analysis for identification of factors that influence price of private rental
housing
Supply and demand law refers to be the basic but one of the important economic
principles, which explains how certain factors like taxation, population and more, affect pricing
of products or services. It states that higher demand of a commodity result in increasing price of
same and vice versa. But both these topics work against each other i.e. excessive supply of a
good reduces its prices at market while not having enough supply, increases the same.
Considering this fact, in case of housing market, increasing demand for purchasing house or
taking it on rent, results in increasing its price. Whereas, if there is glut of availability of same in
certain marketplace, then it results in reducing pricing of house with decrease in demand.
Therefore, it is analysed that rental housing market is relied heavily on this economic principle
(Law of supply and demand), where each transactions involves both landlord and tenants.
Although, real estate if considered as prominent within industry, but it takes long time for
constructing new homes, fixing up old ones then find buyers and sellers for transactions. In
context with UK, it is one of the overcrowded European nation, where housing challenge is
enormous as well as need adequate attention, because majority of population (including
residents, non-residents and migrants) lives in rented property.
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